PERFORMANCE AUDIT
DEPARTMENT OF TRANSPORTATION
NORTH CAROLINA HIGHWAY TRUST FUND
DECEMBER 1998
AUDITOR'S TRANSMITTAL
December 14, 1998
The Honorable James B. Hunt, Jr., Governor
Secretary E. Norris Tolson, Department of Transportation
Members of the Board of Transportation
Members of the North Carolina General Assembly
Ladies and Gentlemen:
We are pleased to submit this performance audit of the Department of Transportation,
North Carolina Highway Trust Fund. The objectives of the audit were to determine the
actual revenues received, compare to original estimates, and estimate anticipated revenues
for the duration of the Trust Fund projects; to identify the Trust Fund projects as
contained in legislation, determine the status of each project, compare original costs and
time estimates to current estimates, and estimate completion dates based on data available;
to examine progress on completing paving of secondary roads; and to examine Trust Fund
procedures for expenditure and transfer of funds.
This report consists of an executive summary, program overview, and operational findings
and recommendations. The Secretary of Transportation has reviewed a draft copy of this
report. His written comments are included as Appendix B.
We wish to express our appreciation to Secretary Tolson and his staff for the courtesy,
cooperation, and assistance provided us during this effort.
Respectfully submitted,
Ralph Campbell, Jr.
State Auditor
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY ..................................................................................................................... 1
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY .................................................................. 3
BACKGROUND INFORMATION........................................................................................................ 5
FINDINGS AND RECOMMENDATIONS.......................................................................................... 17
Revenue Projections ........................................................................................................................... 17
Project Status ............................................................................................................................... ..... 23
Secondary Roads ............................................................................................................................... 32
Trust Fund Expenditures and Transfers.............................................................................................. 38
TABLES:
1 Original Highway Trust Fund Revenue Projections .................................................................... 7
2 Intrastate System Routes Identified by Statute ............................................................................ 8
3 Urban Loops Identified by Statute .............................................................................................. 8
4 Trust Fund Revenues from Motor Fuels Tax .............................................................................. 9
5 Trust Fund Revenues from Highway Use Tax ............................................................................ 9
6 Fees Related to Motor Vehicle Titles........................................................................................ 10
7 Trust Fund Revenues from Title Fees....................................................................................... 10
8 Highway Trust Fund Revenue from Retirement of Refunding Bonds........................................ 10
9 Interest Income Earned by The Highway Trust Fund................................................................ 11
10 Highway Trust Fund Expenditures for Secondary Roads and Aid to Municipalities
FY89- 90 through FY93- 94 ................................................................................................... 13
11 1989 Data Supporting Calculation of Highway Trust Fund Equity Distribution........................ 15
12 Highway Trust Fund Equity Distribution by Region: FY89- 90 through FY96- 97 .................... 16
13 Estimated Trust Fund Cost and Mileage as of 12- 31- 97 ........................................................... 19
14 Highway Trust Fund: Projected Revenues and Distributions: FY97- 98 through FY2012- 13 ... 21
15 Highway Trust Fund Project Status as of December 1997......................................................... 24
16 Trust Fund Eligible Projects for Which No Trust Fund Monies Have Been Expended .............. 25
17 Highway Trust Fund Revenues Minus Trust Fund Obligations
FY89- 90 through FY93- 94 ................................................................................................... 29
18 Schedule of Unpaved Secondary Roads as of December 1997................................................... 34
19 Summary of Secondary Roads With Identified Unavailable Right of Way ................................ 36
20 Actual Transfers of Expenditures from the Highway Trust Fund for Construction Projects....... 39
21 Highway Trust Fund Authorized Expenditures by Route: FY89- 90 through FY96- 97 .............. 40
22 Trust Fund Administrative Funds: FY89- 90 through FY96- 97................................................. 42
23 Number of Positions Funded by the Trust Fund: FY89- 90 through FY96- 97 ............................ 42
EXHIBITS:
1 Actual Gross Revenues vs. Projected Gross Revenues............................................................... 11
2 Trust Fund Construction Expenditures for Intrastate Routes and Urban Loops ......................... 13
3 NC Highway Trust Fund Equity Formula Regions ................................................................... 14
4 Gallons of Motor Fuels Sold: FY89- 90 through FY97- 98........................................................ 17
5 Number of Vehicles Titled and Registered: 1989 through 1997............................................... 18
6 Highway Trust Fund: Difference in Actual vs. Projected Revenues
FY89- 90 through FY96- 97 ................................................................................................... 18
7 Highway Trust Fund: Difference in Actual vs. Revised Projected Revenues
FY91- 92 through FY96- 97 ........................................................................................................ 19
8 Highway Trust Fund Projects and Costs as Percent of Total TIP Projects and Costs ................. 23
9 North Carolina Intrastate System Project Status ( includes Loops)............................................. 27
10 Highway Trust Fund Obligations vs. Limitations: FY89- 90 through FY93- 94......................... 29
11 Changes in Highway Trust Fund Costs Projections .................................................................. 30
12 Highway Trust Fund Construction Costs Per Mile.................................................................... 30
13 Miles of Unpaved Secondary Roads by Fiscal Year .................................................................. 33
14 Miles of Secondary Roads Paved vs. Department Goals............................................................ 32
15 Priority System for Paving of Secondary Roads ........................................................................ 38
TABLE OF CONTENTS
APPENDICES:
A General Statutes: Article 14, Chapter 136................................................................................. 47
B Auditee Response ...................................................................................................................... 55
DISTRIBUTION OF AUDIT REPORT............................................................................................... 61
EXECUTIVE SUMMARY
1
We have conducted a performance audit of the North Carolina Highway Trust Fund
administered by the North Carolina Department of Transportation ( Department). This
audit was undertaken at the request of the legislative leadership. The audit examined
original assumptions and projections, and evaluated current assumptions and projections,
as well as the Department’s compliance with statutory requirements for the Trust Fund.
The North Carolina Highway Trust Fund was established by legislation in 1989 for the
purpose of improving identified “ primary transportation corridors” within the State
( 1,844.2 miles) and completing urban loops around seven major metropolitan areas ( 205.4
miles). Additionally, the Trust Fund was to provide for the paving of all state- maintained
dirt roads and for additional assistance to municipalities for city streets. Funds were to
come from motor fuel, alternative fuel, and road tax revenues; motor vehicle use tax;
revenue from certificate of title fees; revenue from retirement of refunding bonds; and
interest income earned by the Fund. Originally estimated to take 13.5 years and $ 8.2
billion to complete, the Department now estimates that the Trust Fund will require 23
years and $ 11.6 billion to complete. As of December 31, 1997, Department records
showed that 27% of the identified miles had been completed, requiring 24% of the current
estimated costs.
The draft report was reviewed by the Secretary of Transportation. His response is
included as Appendix B, page 55.
FINDINGS
Page
REVENUE PROJECTIONS ................................................................................................................ 17
DEPARTMENT OFFICIALS MADE OVERLY OPTIMISTIC INITIAL TRUST
FUND REVENUE FORECASTS. .................................................................................................... 17
PROJECTED TRUST FUND REVENUES MAY NOT BE SUFFICIENT TO
MEET THE NEEDS OF THE PROGRAM....................................................................................... 19
PROJECT STATUS......................................................................................................................... ... 23
THE CURRENT CONSTRUCTION SCHEDULE WILL NOT MEET THE
REVISED COMPLETION DATE OF 2013 FOR TRUST FUND PROJECTS.................................. 25
THE DEPARTMENT WAS NOT ABLE TO SIGNIFICANTLY ACCELERATE
TRUST FUND CONSTRUCTION AFTER THE EXPIRATION OF THE INITIAL
LIMITATIONS ON CONSTRUCTION EXPENDITURES. ............................................................. 26
ESTIMATED COSTS FOR TRUST FUND PROJECTS HAVE INCREASED 53%
SINCE 1989........................................................................................................................... ......... 30
EXECUTIVE SUMMARY
2
FINDINGS ( concluded)
Page
SECONDARY ROADS ........................................................................................................................ 32
THE ANNUAL PAVING GOALS FOR SECONDARY ROADS WILL NOT
MEET THE STATUTORY TIME REQUIREMENTS...................................................................... 33
UNDER CURRENT BOARD POLICY, THE DEPARTMENT WILL NOT BE
ABLE TO PAVE ALL UNPAVED SECONDARY ROADS WITH 50+ VEHICLE
TRAFFIC........................................................................................................................ ................ 35
DEPARTMENT PROCEDURES FOR PRIORITIZING THE PAVING OF
SECONDARY ROADS HAVE NOT ASSURED COMPLIANCE WITH
STATUTES. ............................................................................................................................... .... 37
TRUST FUND EXPENDITURES AND TRANSFERS ...................................................................... 38
FEDERAL MATCHING FUNDS RECEIVED FOR TRUST FUND PROJECTS
ARE DEPOSITED INTO THE HIGHWAY FUND ACCOUNT....................................................... 40
TRUST FUND ADMINISTRATIVE EXPENDITURES ARE NOT ACCOUNTED
FOR SEPARATELY..................................................................................................................... .. 41
THE DEPARTMENT DOES NOT HAVE A FORMAL PLAN FOR TRUST FUND
POSITION REDUCTION. ............................................................................................................... 42
THE DEPARTMENT DOES NOT HAVE WRITTEN POLICIES AND
PROCEDURES FOR TRUST FUND EXPENDITURES. ................................................................. 43
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
3
North Carolina General Statute § 147- 64 empowers the State Auditor with authority to
conduct performance audits of any State agency or program. Performance audits are
reviews of activities and operations to determine whether resources are being used
economically, efficiently, and effectively. Performance audits may also include financial
reviews.
This performance audit of the North Carolina Highway Trust Fund ( Trust Fund), within
the Department of Transportation ( Department), was undertaken at the request of the
legislative leadership. The State Auditor was asked to separately review the Trust Fund
activities. Specific objectives were to:
· Determine the actual revenues received, compare to original estimates, and estimate
anticipated revenues for the duration of the Trust Fund projects;
· Identify the Trust Fund projects as contained in legislation, determine status of each project,
compare original cost and time estimates to current estimates, and estimate completion dates
based on data available;
· Examine progress on completing paving of secondary roads; and
· Examine Trust Fund procedures for expenditure and transfer of funds, including the use of
administrative funds and number and type of positions funded by the Trust Fund.
The scope of the audit encompassed selected aspects of the operation of the North
Carolina Highway Trust Fund.
During the period February 9, 1998 through August 10, 1998, we conducted the on- site
fieldwork for the audit of the Trust Fund. To achieve the audit objectives, we employed
various auditing techniques which adhere to the generally accepted standards as
promulgated in Government Auditing Standards issued by the Comptroller General of the
United States. These techniques included:
· Review of existing General Statutes and North Carolina Administrative Code as they relate
to the Trust Fund;
· Review of Department policies and procedures for the administration of the Trust Fund;
· In- depth interviews with Department staff, as well as interviews with persons external to the
Department;
· Review of existing studies and reports on the operations of the Trust Fund;
· Examination of position descriptions and payroll data;
· Identification of fund transfers from the Trust Fund to the Highway Fund; and
· Analysis of expenditures from the Trust Fund administrative funds.
This report contains the results of the audit as well as specific recommendations aimed at
improving the operations of the Trust Fund in terms of economy, efficiency, and
effectiveness. Because of the test nature and other inherent limitations of an audit,
together with the limitations of any system of internal and management controls, this audit
would not necessarily disclose all weaknesses in the system or lack of compliance. Also,
projection of any of the results contained in this report to future periods is subject to the
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
4
risk that procedures may become inadequate due to changes in conditions and/ or
personnel, or that the effectiveness of the design and operation of the policies and
procedures may deteriorate.
BACKGROUND INFORMATION
5
In 1989 State leaders decided that North Carolina, on an economic threshold, needed to
complete the “ primary transportation corridors” in the State to take full advantage of an
expanding economy and to attract new industry. Leaders felt the existing Transportation
Improvement Program ( TIP) was slow in addressing the perceived construction needs.
Department of Transportation ( Department) management indicated to legislators that the
TIP, a planning device, should not be considered an accurate schedule for initiating or
completing a highway construction project. As a result, a legislative Joint Transportation
Oversight Committee ( Committee) was formed to address these concerns.
The Department was directed to assist the Committee and its staff in determining the
projected requirements for completing the “ primary transportation corridors.” The
concept called for completion of all interstate highways within North Carolina and the
multi- laning of other cross- state highways. The Committee also determined that urban
loops were needed around seven of the major metropolitan areas to assist in the flow of
traffic and prevent “ bottlenecking” during rush hours. Legislation was drafted outlining
the identified needs. ( Many of the corridor and urban loop projects identified by the
Committee were already in the TIP at various stages of completion.) Stipulations were
added to the legislation to ensure that most areas of the State, including rural undeveloped
areas, received some financial benefit from the legislation. To this end, the legislation
called for the paving of all state- maintained dirt roads and for providing additional
assistance to municipalities for city streets.
Department staff gave its “ best estimates” for construction costs based on average mileage
costs within the major geographic sectors of the State ( mountains, piedmont, and coast).
However, cost estimates did not include any consideration of annual economic or
construction cost inflation or preliminary costs such as planning, engineering, and
environmental impact studies. These types of additional costs were not included due to
the time constraints for providing information to the Committee. Therefore, the initial
costs given to the Committee were significantly underestimated.
The initial estimate of time to complete the Trust Fund construction projects was 13.5
years, beginning in fiscal year 1989 and ending in fiscal year 2003. However, due to the
combination of many delaying factors1, Department management now estimates a project
completion time of fiscal year 2013. This means the program will be 23 years duration
instead of the original 13.5. ( See discussion beginning on page 25 relative to time
required to complete all projects.)
Statutory Authority
Article 14, Chapter 136 of the General Statutes contains the legislation establishing the
Trust Fund. ( See Appendix A, page 47) This article also provides for repeal of the
legislation when contracts for all Trust Fund projects have been let and sufficient revenue
has been accumulated to pay the contracts.
1 Delaying factors are discussed in detail in the “ project status” section of the report.
BACKGROUND INFORMATION
6
Creation of the North Carolina Highway Trust Fund:
GS § 136- 176 created a special account within the State Treasury called the North
Carolina Highway Trust Fund. Funds are credited to this account from the following
revenue sources:
1. Motor fuel, alternative fuel, and road tax revenue deposited in the Fund under GS § 105- 449.
2. Motor vehicle use tax deposited in the Fund under GS § 105- 187.9.
3. Vehicle certificate of title fees and other fees payable under GS § 20- 85.
4. Revenue from the retirement of refunding bonds issued to repay highway construction bonds and
deposited in the Fund under GS § 136.83.
5. Interest income earned by the Fund.
Prior to the Trust Fund legislation, the taxes noted above had been received into the
State’s General Fund. Therefore, a statutory provision was necessary to continue some
level of taxation support to the General Fund. GS § 105- 187.9 provides for the State
Treasurer to annually transfer $ 170 million from the Trust Fund to the General Fund on
either a quarterly or fiscal year basis depending on availability of funds.
GS § 136- 176 also provides the Department of Transportation with funding to administer
the Trust Fund. The administrative funding is set at an annual appropriation not to exceed
4.5% 2 of the taxes and fees ( items 1,2 and 3 above). Any administrative funds not
expended in a fiscal year revert back to the Trust Fund for reallocation.
The legislation places the following allocation stipulations on the Trust Fund:
· Sixty- one and ninety- five hundredths percent ( 61.95%) to plan, design, and construct the projects
of the Intrastate System described in GS § 136- 179.
· Twenty- five and five hundredths percent ( 25.05%) to plan, design, and construct the urban loops
described in GS § 136- 180.
· Six and one- half percent ( 6.5%) to supplement the appropriation to cities for city streets under
GS § 136- 181.
· Six and one- half percent ( 6.5%) for secondary road construction as provided in GS § 136- 182.
Table 1, page 7, shows the original revenue projections for the Trust Fund as found in the
1989 Transportation Improvement Program ( TIP).
2 The administrative percentage was originally set at 5% but was adjusted to 4.5% in 1990.
BACKGROUND INFORMATION
7
Table 1
DEPARTMENT OF TRANSPORTATION
ORIGINAL HIGHWAY TRUST FUND REVENUE PROJECTIONS
($ in millions)
Fiscal Years 13.5
YEAR
TOTALS
1989- 90 1990- 91 1991- 92 1992- 93 1993- 94 1994- 95 1995- 96 1996- 97 1997- 98 1998- 99 1999- 00 2000- 01 2001- 02 2002- 03
FUNDING SOURCES
25% GAS TAX REVENUES $ 180.4 $ 221.9 $ 227.4 $ 233.1 $ 238.9 $ 244.9 $ 251.0 $ 257.3 $ 263.7 $ 270.3 $ 277.1 $ 284.0 $ 291.1 $ 298.4 $ 3539.7
3% USE TAX 294.8 404.8 416.9 429.5 451.9 465.5 479.4 493.8 508.6 523.9 539.6 555.8 572.5 589.6 6726.5
TITLE FEE INCREASE $ 30 52.5 61.8 63.7 65.6 67.5 69.6 71.6 73.8 76.0 78.3 80.6 83.1 85.6 88.1 1017.7
MISC. FEES $ 10 15.6 18.3 18.9 19.4 20.0 20.6 21.3 21.9 22.6 23.2 23.9 24.6 25.4 26.1 301.9
INTEREST ON TRUST
FUND
8.4 11.2 17.8 18.4 19.5 20.5 21.3 22.7 23.7 24.4 25.3 26.1 26.9 27.9 294.2
DEBT SERVICE
AVAILABILITY
0 0 0 0 0 9.6 12.1 32.2 38.0 38.0 38.0 38.0 38.0 38.0 281.9
TOTAL FUNDING
SOURCES
551.7 718.0 744.7 766.0 797.8 830.7 856.7 901.7 932.6 958.1 984.5 1011.6 1039.5 1068.1 12161.9
LESS GENERAL FUND
TRANSFER
- 279.4* - 356.0* - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 2675.4
TOTAL TRUST FUND
REVENUES
$ 272.3 $ 362.0 $ 574.7 $ 596.1 $ 627.8 $ 660.7 $ 686.7 $ 731.7 $ 762.5 $ 788.1 $ 814.4 $ 841.6 $ 869.5 $ 898.1 $ 9486.5
* Note: Section 4.3 of the 1989 House Bill 399 authorized these transfers.
SOURCE: 1989 TRANSPORTATION IMPROVEMENT PROGRAM, Planks, Pavements, and Progress
BACKGROUND INFORMATION
8
Table 2
INTRASTATE SYSTEM ROUTES
IDENTIFIED BY STATUTE
Intrastate Route Original
Estimated
Miles
I- 40 21.4
I- 77 8.9
I- 85 79.5
I- 95 0.0
US 1 100.1
US 13 45.9
US 17 200.0
US 19 AND 19( E) 67.1
US 23 30.0
US 23- 441 11.4
US 52 22.6
US 64- 264 120.0
US 64 74.9
US 70 64.9
US 74 AND 74 ( A) 98.6
US 158 245.9
BRIDGE ( US 158) 9.9
US 221 57.6
US 220 30.1
US 220/ NC 68 30.7
US 264 30.3
US 321 45.5
US 421 AND 421 ( A) 108.5
US 24- 27 195.2
NC 87 85.1
NC 105 30.0
NC 168 18.5
NC 194* 11.6
TOTAL 1844.2
* The NC 194 project initially identified in
legislation was later merged with the US
221 project by the Department.
Source: NC General Statutes and 1989
Transportation Improvement
Program
Table 3
URBAN LOOPS IDENTIFIED BY
STATUTE
Loop Original
Estimated
Miles
Asheville 0.0
Charlotte 63.4
Durham 16.4
Greensboro 41.6
Raleigh 39.3
Wilmington Bypass 20.2
Winston- Salem 24.5
TOTAL 205.4
Source: NC General Statutes and 1989
Transportation Improvement
Program
Intrastate System Trust Fund Projects:
GS § 136- 178 states that the Intrastate System “ trans-portation
corridors” are established to provide high-speed,
safe travel service throughout the State, con-nect
major population centers both inside and outside
the State, and provide safe, convenient, through- travel
for motorists. The Intrastate System is designed to
support statewide growth and development objectives
and to connect to major highways of adjoining states.
All segments of the routes in the Intrastate System
must have at least four travel lanes or bypasses.
GS § 136- 179 designates the specific intrastate high-way
routes ( see Table 2), the specific counties
wherein construction is required, and contains a
description of the construction requirements to com-plete
the routes to specifications. There are 145 intra-state
projects on 28 routes identified under this statute
through December 1997.
Urban Loop Trust Fund Projects:
GS § 136- 180 designates the seven specific urban
loops ( see Table 3), the county( s) in which the loops
are located, and contains a general description of
where the loops are to be constructed. Currently,
there are 16 projects identified for the loops.
Revenues:
The 1989 General Assembly created the North Caro-lina
Highway Trust Fund, designated the sources of
revenue for the Fund, and specified the purposes for
which Trust Fund revenue may be used. The High-way
Trust Fund originally consisted of motor fuel
tax, highway use tax, and title fees.
BACKGROUND INFORMATION
9
Table 4
TRUST FUND REVENUES
( NET) FROM MOTOR FUELS
TAX
FY Amount Collected
1990 $ 184,886,274
1991 206,551,360
1992 213,363,345
1993 212,444,033
1994 222,011,480
1995 223,032,201
1996 232,662,410
1997 243,731,232
TOTAL $ 1,738,682,335
Source: DOT Financial Records
Motor Fuel Tax
Table 5
TRUST FUND REVENUES
( NET) FROM HIGHWAY
USE TAX
FY Amount Collected
1990 $ 164,693,276
1991 231,358,005
1992 242,339,363
1993 273,251,863
1994 330,473,708
1995 364,648,614
1996 397,273,096
1997 407,577,335
TOTAL $ 2,411,615,260
Source: DOT Financial Records
Twenty- five percent of the excise
taxes collected on motor fuels and
25% of the road tax levied on motor
carriers for the privilege of using the roads in this State are
designated for the Highway Trust Fund. These taxes were
increased effective August 1, 1989, from 15.7 cents a
gallon to 20.9 cents a gallon, an increase of 5.2 cents a
gallon. Table 4 shows the net revenues collected from the
motor fuels tax for the first 8 years of the Trust Fund.
The Highway Use Tax, effective
October 1, 1989, is levied when a
certificate of title for a motor vehicle is issued. Certain
motor vehicles that will be rented or leased are not taxed.
This titling tax replaced the 2%, $ 300 maximum sales tax on
motor vehicles. The use tax, 3% of the retail value of the
vehicle, cannot be less than $ 40.00, could not exceed $ 1,000
until July 1, 1993, and cannot exceed $ 1,500 after that date.
Those who lease or rent motor vehicles are given an option
of paying the use tax when they purchase a vehicle for lease
or rent, or paying a tax on the gross lease or rental receipts3
subsequently received when the vehicle is leased or rented.
The maximum use tax applies to lease or rental receipts, but
the maximum is computed anew on each lease or rental of
the vehicle to a different person. Table 5 summarizes the net
revenues collected from the Highway Use Tax.
Revenue from the fee increases shown in Table 6, page 10, related to
titles for motor vehicles are also deposited in the Highway Trust Fund.
These fees are in addition to the highway use tax imposed at the time a
certificate of title is issued. The fee increases were effective August 15, 1989. Table 7,
page 10 summarizes net title fee revenues.
3 The optional tax on gross receipts is 8% on leases or rentals to the same person for no more than 90
days, and it is 8% for the first 90 days of a lease or rental to the same person for more than 90 days and
3% for the period in excess of 90 days. In 1991, changes in legislation provided that the 3% tax applied to
leases greater than 365 days and the 8% tax applied to leases less than 365 days. Revenue from the
optional tax is placed in the Trust Fund if it is at the 3% rate and the General Fund if it is at the 8% rate.
Highway Use Tax
Title Fees
BACKGROUND INFORMATION
10
Table 8
HIGHWAY TRUST FUND REVENUE
FROM RETIREMENT OF REFUNDING
BONDS
Fiscal Year Yearly Amount
Credit to Trust
Fund
1994- 95 $ 9,600,000
1995- 96 12,100,000
1996- 97 32,300,000
1997- 98 and each
subsequent year until
the Trust Fund ends
38,000,000
Source: DOT Financial Records
Table 6
FEES RELATED TO MOTOR VEHICLE TITLES
Type Fee Prior
to 8/ 15/ 89
Fee After
8/ 15/ 89
Certificate of Title $ 5.00 $ 35.00
Duplicate or Corrected Title $ 7.00 $ 10.00
Repossessor of Title $ 5.00 $ 10.00
Transfer of Registration $ 4.00 $ 10.00
Replacement of Registration
Plates
$ 9.00 $ 10.00
Duplicate of Registration
Certificate
$ 3.00 $ 10.00
Recording Supplementary Lien $ 3.00 $ 10.00
Title Transferred to a Dealer
when no tax is due
$ 0.00 $ 10.00
Instant Title N/ A $ 50.00
Source: NC General Statutes 20- 85
Table 7
TRUST FUND REVENUES ( NET) FROM TITLE FEES
Fiscal
Year
Certificate of
Title Fee
Miscellaneous
Registration
Fee
Lien
Recording
Fees
Total
Fees
1990 $ 43,694,744 $ 5,770,320 $ 2,032,309 $ 51,497,373
1991 46,973,156 6,065,620 2,338,557 55,377,333
1992 48,736,498 7,383,069 2,399,322 58,518,889
1993 51,579,599 7,863,727 2,717,483 62,160,809
1994 56,908,904 8,548,719 2,682,036 68,139,659
1995 65,028,791 9,479,502 2,567,991 77,076,284
1996 64,201,381 10,217,217 2,607,998 77,026,596
1997 73,029,553 10,244,618 2,443,177 85,717,348
TOTAL $ 450,152,626 $ 65,572,792 $ 19,788,873 $ 535,514,291
Source: DOT Financial Records
Beginning
in fiscal year 1994- 95, the Trust Fund received reve-nue
from the retirement of refunding4 bonds issued to
repay highway construction bonds. Legislation directs
the State Treasurer to credit to the Highway Trust
Fund one- fourth of a set amount for each year within
10 days after the end of each calendar quarter. Table
8 shows the amount credited to the Trust Fund for
fiscal years 1994- 95 through 1997- 98.
4 “ Refunding bonds” are bonds issued at a lower interest rate to replace higher interest rate bonds.
Transfers from the Highway Fund
BACKGROUND INFORMATION
11
Table 9
INTEREST INCOME EARNED BY
THE HIGHWAY TRUST FUND
Fiscal Year Interest Income
1990 $ 7,425,858
1991 20,843,501
1992 23,105,860
1993 24,116,084
1994 22,468,967
1995 28,856,582
1996 32,670,600
1997 35,719,382
TOTAL $ 195,206,834
Source: DOT Financial Records
The legislation creating the
Trust Fund also set up a
special account, designated the North Carolina High-way
Trust Fund, within the State treasury in 1989.
Interest income earned on the previously- described
revenues deposited with the State treasury is
maintained in the Highway Trust Fund. Table 9 shows
the amount of interest income earned by the Trust
Fund since its inception.
Comparison of Revenues
The original 1989 total estimated revenue requirements to complete all Trust Fund
projects by fiscal year 2003 were approximately $ 12.1 billion. As of June 30, 1997, actual
gross revenues from all sources were $ 5,013,677,272, approximately $ 1.1 billion less than
original projected revenues for this 8- year period as shown in Exhibit 1. Gross revenues,
both actual and projected, are before any transfers to the General Fund. See page 17 for a
complete discussion of Trust Fund revenues.
Source: DOT Financial Records
EXHIBIT 1
ACTUAL GROSS REVENUES VS. PROJECTED GROSS REVENUES
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
Fiscal Year
0
200
400
600
800
1000
$ in Millions
ACTUAL PROJECTED
ACTUAL 416.6 523.5 546.2 581.7 652.7 713.1 762.1 817.7
PROJECTED 551.7 718 744.7 766 797.9 830.7 856.7 901.7
Investment Income
BACKGROUND INFORMATION
12
The 1995 General Assembly enacted the “ State Highway
Bond Act of 1996,” as set forth in Chapter 590 of the 1995
Session Laws, creating the State Highway Bond Fund. The Act authorizes the issuance of
$ 950,000,000 in bonds for the purpose of providing funds for constructing, improving and
relocating roads, bridges, tunnels, and other highway facilities constituting the urban
loops, highways in the Intrastate System, or a part of the State secondary highway system
as set forth in Chapter 692 of the 1989 Session Laws creating the Highway Trust Fund.
The bond issue was approved by a majority of qualified voters of the State of North
Carolina in a referendum held on November 5, 1996.
The proceeds of the bonds are appropriated to the Department of Transportation. The
legislation gives the Department authority to use bond funds along with other available
funds to pay some or all of the costs of Trust Fund projects. The Department is to
determine when the bond funds should be used with the following restrictions:
· $ 500,000,000 for urban loops;
· $ 300,000,000 for highways in the Intrastate System; and
· $ 150,000,000 for projects constituting a part of the State Secondary Highway System.
Debt service on the bonds will be provided from amounts deposited to the Highway Trust
Fund.
In November 1997, the North Carolina State Treasurer issued bonds totaling
$ 250,000,000. The Department had allocated approximately $ 51,000,000 of this amount
for Highway Trust Fund projects as of December 1997.
Expenditures/ Transfers
Funds from the Trust Fund are “ . . . annually appropriated to the Department of
Transportation to be allocated and used as provided . . .” in Article 14, Chapter 136 of the
General Statutes. Department management made the decision in 1989 when the Trust
Fund was established to use its existing accounting system for all Trust Fund activity.
Unlike other State agencies, the Department’s accounting system does not provide for
fund accounting. 5 Rather, it is set up as a “ work order” system, which accounts for all
expenditures related to the various components of a construction project. These work
orders are identified and approved by the Board of Transportation. All work orders are
processed by the Department’s Fiscal staff and are paid from the Department’s current
operating fund called the Highway Fund. On a monthly basis, funds are transferred from
the Highway Trust Fund to the Highway Fund for the actual expenditures made on the
Trust Fund’s behalf. These expenditures can and do include expenditures made for work
orders which have been approved for federal matching funds. Funds requested are
subsequently transferred from the Trust Fund to the Highway Fund as reimbursement of
costs incurred.
5 The Department is developing a system to adapt its current work order accounting system to properly
recognize fund accounting principles, with implementation anticipated in 2003.
Other Revenue Sources
BACKGROUND INFORMATION
13
EXHIBIT 2
TRUST FUND CONSTRUCTION EXPENDITURES FOR
INTRASTATE ROUTES AND URBAN LOOPS
Source: DOT Financial Records
$ 409
$ 514
$ 537
$ 572
$ 643
$ 200
$ 250
$ 300
$ 400
$ 500
$ 69
$ 181
$ 289
$ 240
$ 283
89- 90
90- 91
91- 92
92- 93
93- 94
FISCAL YEAR
$ 0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600 $ 700 $ 800
$ in Millions
REVENUE LIMITATION EXPENDITURES
Five- Year Construction
Expenditure Limitation
Distribution Formula
The legislation creating the Highway Trust Fund contains three restrictions on the
expenditures of Trust Fund revenue:
· a five- year limitation on construction spending,
· a requirement that highway construction funds be spent evenly throughout the State, and
· a two- year limitation on letting contracts in anticipation of revenue.
The act restricted the amount of Trust Fund revenue ( other
than revenue allocated for city streets or secondary roads)
that could be used to construct or improve highways during
the first five years of the Trust Fund
program. Exhibit 2 shows the actual
revenues, expenditures, and the set
limitations for fiscal years 1989- 90
through 1993- 94.6 Trust Fund
revenues in excess of the maximum
amounts could be used only for
preliminary planning and design and the
acquisition of rights- of- way for
scheduled highways and highway
improvements to be funded from the
Trust Fund. Table 10 shows the actual
expenditures for secondary roads and
state aid to municipalities for the same
period.
Table 10
HIGHWAY TRUST FUND EXPENDITURES
FOR SECONDARY ROADS AND AID TO MUNICIPALITIES
Fiscal
Year
Secondary
Roads
Aid To
Municipalities
Total
89- 90 $ 23,045,118 $ - 0- $ 23,045,118
90- 91 42,813,727 13,630,110 56,443,837
91- 92 42,663,737 16,129,070 58,792,807
92- 93 36,636,616 21,361,164 57,997,780
93- 94 49,740,787 23,571,485 73,312,272
TOTALS $ 194,899,985 $ 74,691,829 $ 269,591,814
Source: DOT Financial Records
GS § 136- 17.2A establishes a distribution formula for the
expenditure of all highway revenues, including Trust Fund,
for: the Intrastate System, Department appropriations, and federal revenue expended on
the Transportation Improvement Program ( TIP). The formula does not apply to
expenditures on urban loops. It also does not apply to secondary roads, contract
6 The difference between the expenditure limitation amounts and the actual expenditures may have been
obligated to contractors. See page 29 for discussion.
BACKGROUND INFORMATION
14
Source: DOT records
Region A Divisions 1, 4
Region B Divisions 2, 3
Region C Divisions 5, 6
Region D Divisions 7, 9
Region E Divisions 8, 10
Region F Divisions 11, 12
Region G Divisions 13, 14
Exhibit 3
NC HighwayTrust Fund
Equity Formula Regions
resurfacing, and small urban projects because they are not part of the TIP. The formula is
designed to ensure that every county in the State receives its fair share of transportation
improvements.
To apply the formula, the ex-isting
14 highway divisions
are divided into seven distri-bution
regions, each of which
contains two highway divi-sions.
These are called the
“ equity formula regions” as
shown in Exhibit 3. In any
consecutive seven- year pe-riod,
each region must receive
between 90% and 110% of
the amount calculated for it.
Calculating a region’s share
for a year is a multi- step pro-cess.
Annually, the Secretary
of Transportation is charged
with computing the distribu-tion
as follows:
· Estimate total anticipated revenues for next seven years beginning October 1.
· Determine each region’s percentage of total State population.
· Determine each region’s percentage of uncompleted intrastate miles in the State.
Each region’s share is the sum of the following numbers divided by 4:
· Region’s percentage share of uncompleted intrastate miles
· Population percentage share
· Population percentage share ( repeated)
· 14.29% ( equal to 1/ 7 representing each of the 7 regions).
For example, Region A’s percentage share on October 1, 1989 would have been
determined as follows:
Percentage of uncompleted intrastate miles 21.50%
Population percentage 10.20%
Population percentage ( repeated) 10.20%
The fraction 1/ 7 expressed as a percentage 14.29%
TOTAL 56.19% / 4 = 14.05%
Table 11 contains data showing the calculations for each region for 1989. Once a region’s
tentative share for a seven- year period is determined, DOT personnel can then determine
the region’s dollar share for the current fiscal year by multiplying the funds available for
the fiscal year by the region’s calculated percentage.
BACKGROUND INFORMATION
15
Table 11
1989 DATA SUPPORTING CALCULATION OF
HIGHWAY TRUST FUND EQUITY DISTRIBUTION
Region
Uncompleted
Intrastate
Miles In
Region
% Of Total
Uncompleted
Intrastate
Miles
Population
Of Region
( 000’ s)
% Of Total
Population
Percentage
Share Of
Highway
Funds
A 392.4 21.5 658.7 10.2 14.0
B 256.4 14.0 788.1 12.1 13.2
C 297.4 16.3 1,234.1 19.0 17.2
D 177.6 9.7 1,201.4 18.5 15.3
E 332.7 18.2 1,102.7 17.0 16.6
F 174.2 9.5 854.9 13.2 12.5
G 196.2 10.8 647.5 10.0 11.2
TOTALS 1,826.9 100.0% 6,487.4 100.0% 100.0%
Source: DOT Financial Records
Table 12, page 16 shows each region’s share by fiscal year for the first 8 years of the Trust
Fund.
GS § 136- 176( d) allows Trust
Fund projects to be let in
anticipation of revenue. However, the period for which revenue may be anticipated is
limited to the two- year period following the year in which the contract is let. Without this
limitation, contracts for Trust Fund projects could be let in anticipation of revenue for an
indefinite period. The certified, anticipated revenues of the Trust Fund for fiscal years
1997- 98 and 1998- 99 are $ 843,781,305 and $ 870,693,348, respectively.
Limit on Contracts Let in Anticipation of Revenue
BACKGROUND INFORMATION
16
Table 12
HIGHWAY TRUST FUND EQUITY DISTRIBUTIONS BY REGION: FY89- 90 THROUGH FY96- 97
($ in millions)
FY89- 90 FY90- 91 FY91- 92 FY92- 93 FY93- 94 FY94- 95 FY95- 96 FY96- 97
Region
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
A 14.0 $ 18.4 14.1 $ 21.7 14.0 $ 28.6 14.0 $ 31.5 14.3 $ 38.0 14.4 $ 42.5 14.8 $ 49.1 14.6 $ 52.6
B 13.2 17.3 13.3 20.4 13.4 27.4 13.4 30.1 13.0 34.6 13.0 38.3 13.1 43.4 13.1 47.2
C 17.2 22.6 17.2 26.4 17.5 35.7 17.5 39.4 17.7 47.0 17.8 52.5 17.6 58.4 17.6 63.4
D 15.3 20.0 15.2 23.4 15.1 30.9 15.1 33.9 14.9 39.6 14.8 43.6 14.7 48.7 14.7 53.0
E 16.6 21.8 16.7 25.7 16.7 34.1 16.7 37.6 16.8 44.6 17.0 50.1 16.8 55.7 17.1 61.6
F 12.5 16.4 12.3 18.9 12.3 25.1 12.3 27.7 12.2 32.4 12.1 35.7 12.0 39.8 12.1 43.6
G 11.2 14.7 11.2 17.2 11.0 22.5 11.0 24.7 11.1 29.5 10.9 32.1 11.0 36.5 10.8 38.9
TOTALS 100.0 $ 131.2 100.0 $ 153.7 100.0 $ 204.3 100.0 $ 224.9 100.0 $ 265.7 100.0 $ 294.8 100.0 $ 331.6 100.0 $ 360.3
Source: DOT Financial Records
SUMMARY OF FUNDS DISTRIBUTIONS BY REGION
($ in millions)
Fiscal
Year
A B C D E F G TOTALS
89- 90 $ 18.4 $ 17.3 $ 22.6 $ 20.0 $ 21.8 $ 16.4 $ 14.7 $ 131.2
90- 91 21.7 20.4 26.4 23.4 25.7 18.9 17.2 153.7
91- 92 28.6 27.4 35.7 30.9 34.1 25.1 22.5 204.3
92- 93 31.5 30.1 39.4 33.9 37.6 27.7 24.7 224.9
93- 94 38.0 34.6 47.0 39.6 44.6 32.4 29.5 265.7
94- 95 42.5 38.3 52.5 43.6 50.1 35.7 32.1 294.8
95- 96 49.1 43.4 58.4 48.7 55.7 39.8 36.5 331.6
96- 97 52.6 47.2 63.4 53.0 61.6 43.6 38.9 360.3
TOTALS $ 282.4 $ 258.7 $ 345.4 $ 293.1 $ 331.2 $ 239.6 $ 216.1 $ 1966.5
FINDINGS AND RECOMMENDATIONS
17
EXHIBIT 4
GALLONS OF MOTOR FUELS SOLD
FY89- 90 THROUGH FY97- 98
Source: North Carolina Department of Revenue
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97 97- 98
FISCAL YEAR
0
1
2
3
4
5
GALLONS ( in billions)
GALLONS 3.99 3.881 3.916 4.033 4.215 4.322 4.462 4.609 4.714
EVENUE PROJECTIONS
Objective: To determine the actual revenues received, compare
to original estimates, and estimate anticipated revenues for the
duration of the Trust Fund projects.
There are numerous uncertainties involved in making any revenue projections over a
number of years. When the revenues are sensitive to economic changes, those
uncertainties are compounded. Several events can dramatically affect the revenue
projections used in the TIP: foreign economic and political events, changes in the federal
motor fuels taxes, and the future direction of the national and State economies. Not
knowing the eventual outcome of these and other events makes estimating revenues an
inexact exercise requiring continuous monitoring and periodic adjustments. Given these
factors, we have identified several issues that we feel need the attention of the Board of
Transportation, the Department, and the General Assembly.
Conclusion: Overly optimistic initial revenue projections presented an unrealistic
expectation for completion of Trust Fund projects. In fiscal year
1991- 92, the Department began to make more conservative
projections. In our opinion, any future revenue projections should be
based on actual revenues collected. Using this methodology, we
project a $ 1.1 billion shortfall in the funds needed to fully pay for all
Trust Fund projects.
DEPARTMENT OFFICIALS
MADE OVERLY OPTIMISTIC
INITIAL TRUST FUND REVENUE
FORECASTS.
The primary revenue sources for the
Highway Trust Fund are the motor
fuels tax and a portion of the 3%
highway use tax. Both of these sources
are sensitive to changes in the national
and State economies. Years of
moderate growth in motor fuels usage
( Exhibit 4) and tax collections have
resulted in fairly steady revenues. Additionally, the Highway Trust Fund has not collected
the projected use tax revenues due to declining car sales and fewer motor vehicle title
transactions than anticipated. Exhibit 5 depicts the number of vehicles titled and
R
FINDINGS AND RECOMMENDATIONS
18
EXHIBIT 6
HIGHWAY TRUST FUND
DIFFERENCE IN ACTUAL VS. PROJECTED REVENUES:
FY89- 90 thru FY96- 97*
Source: DOT Financial Records
FISCAL YEAR ACTUAL PROJECTED DIFFERENCE
89- 90 $ 416.6 $ 551.7 -$ 135.1
90- 91 $ 523.5 $ 718.0 -$ 194.5
91- 92 $ 546.2 $ 744.7 -$ 198.5
92- 93 $ 581.7 $ 766.0 -$ 184.3
93- 94 $ 652.7 $ 797.9 -$ 145.2
94- 95 $ 713.1 $ 830.7 -$ 117.6
95- 96 $ 762.1 $ 856.7 -$ 94.6
96- 97 $ 817.7 $ 901.7 -$ 84.0
* Includes all sources of revenues ($ in millions)
registered each year for calendar years 1989 through 1997.7 While these graphs show
some fluctuations, overall changes have been minimal.
EXHIBIT 5
During the first year of the Highway
Trust Fund, fiscal year 1989- 90, the
Department projected $ 294.8
million in highway use tax collection
for the 10 months of the year the
tax was in effect. Actual highway
use tax revenues were $ 164.9
million, a shortfall of $ 129.9 million
in revenues for fiscal year 1989- 90.
For the following fiscal year 1990-
91, the Department projected that
highway use tax would continue to
increase by roughly 37% to $ 404.8
million for the full 12 months.
Actual revenues were $ 231.4
million for 1990- 91, a shortfall of $ 173.4 million for the year. For the initial two- year
period, the revenue shortfall in highway use tax alone amounted to $ 303.3 million less
than the projections made by the Department in 1989. This shortfall is related to the
conditions identified above and an overly optimistic forecast by officials at the State level.
Exhibit 6 shows the difference between the actual revenue collections and the original
projected revenues for the period fiscal years 1989- 90 through 1996- 97.
7 DMV records shows a cumulative total of 12,148,187 vehicles titled in North Carolina as of 12- 31- 97.
NUMBER OF VEHICLES TITLED
Source: North Carolina Division of Motor Vehicles
89 90 91 92 93 94 95 96 97
CALENDAR YEAR
0
0.5
1
1.5
2
2.5
Number in Millions
TITLED 1.98 1.71 1.57 1.7 1.82 2 2.01 2.09 2.11
NUMBER OF VEHICLES REGISTERED
89 90 91 92 93 94 95 96 97
CALENDAR YEAR
0
1
2
3
4
5
6
7
8
Number in Millions
REGISTERED 5.7 5.8 5.7 5.9 5.9 6.2 6.3 6.8 7
FINDINGS AND RECOMMENDATIONS
19
Table 13
ESTIMATED TRUST FUND COST AND MILEAGE
as of December 31, 1997
Cost Miles
Intrastate System $ 8,237,863,000 1,848.1
Urban Loops 3,373,196,000 225.9
TOTAL TRUST FUND COSTS $ 11,611,059,000 2,074.0
Source: 1997- 98 – 2003- 04 Transportation Improvement Program
EXHIBIT 7
HIGHWAY TRUST FUND
DIFFERENCE IN ACTUAL VS. REVISED PROJECTED REVENUES:
FY91- 92 thru FY96- 97*
Source: DOT Financial Records
FISCAL YEAR ACTUAL PROJECTED DIFFERENCE
91- 92 $ 546.2 $ 534.7 $ 11.5
92- 93 $ 581.7 $ 517.9 $ 66.8
93- 94 $ 652.7 $ 587.4 $ 65.3
94- 95 $ 713.1 $ 667.3 $ 45.8
95- 96 $ 762.1 $ 698.4 $ 63.7
96- 97 $ 817.7 $ 716.5 $ 56.2
* Includes all sources of revenues ($ in millions)
Because of changes in general economic conditions, forecasts need to be reviewed and
revised annually for the indi-vidual
revenue categories and
the Trust Fund in general. After
the first two years, Department
officials began to change reve-nue
projections annually to
show a more conservative
growth rate of approximately
3% per year. In fiscal year
1992- 93, the Department began
to use budget projections from
the Office of State Budget and
Management. The annually
revised projections are shown in
Exhibit 7 for fiscal years 1991-
92 through 1996- 97. As can be seen, the revised projections were lower than the actual
revenues.
RECOMMENDATION
The Department should continue to use realistic projections for
revenue growth from the Office of State Budget and Management.
All projections of revenues for the Highway Trust Fund should be
reviewed and revised annually. Projections should be based on the
actual revenues collected for the most recent prior year. ( See finding
below.) Projection procedures should take into account changes in
economic conditions at both the State and federal levels.
PROJECTED TRUST FUND REVENUES MAY NOT BE SUFFICIENT TO
MEET THE NEEDS OF THE PROGRAM.
Department officials are now
projecting that all Trust Fund
projects will be completed by
fiscal year 2013. Total costs
for the Trust Fund projects
are currently projected to be
$ 11.6 billion. ( See Table 13)
Using the actual fiscal year
1996- 97 revenues as the starting point, we projected total Trust Fund revenues for fiscal
years 1997- 98 through 2012- 13. We used a conservative 3% growth factor for revenues.
Table 14, page 21 shows that calculation with total revenues from all sources, including
interest income and transfers from the Highway Fund, to be $ 16.6 billion for that period.
However, as previously pointed out, the Trust Fund legislation restricts the percentage of
total revenues that can be used to plan, design, and construct the intrastate routes to
FINDINGS AND RECOMMENDATIONS
20
61.95% of revenues and 25.05% for the urban loops. Assuming a conservative estimate
for inflation ( 3%) and project growth ( 6%) 8, Table 14 also shows an estimated shortfall of
$ 1.1 billion for construction of intrastate routes and urban loops. Therefore, it would
require an additional two years of revenue at 3.0% growth to have sufficient funds for the
construction of the intrastate routes and urban loops as currently identified. As we noted
earlier, the State has approved the issuance of $ 950,000,000 of bonds for the construction
of various trust fund projects. While the bonds will supply cash for immediate
construction, they will have to be repaid. Therefore, based on our projections, the
Department will still need an additional $ 1.1 billion to fully pay for all Trust Fund projects.
RECOMMENDATION
Department officials and the Board of Transportation should
objectively review the current timetable for completion of the
intrastate routes and urban loops. Consideration should be given to
extending the completion dates for these projects beyond the year
2013 unless revenue increases are significantly more than three
percent per year.
8 The projections for inflation and project growth are those used by Peat Marwick, LLP, in the audit of the
Department of Transportation released in May, 1998. “ Project growth” refers to unanticipated changes to
the project such as increased costs for environmental impact or increased costs as the result of terrain.
FINDINGS AND RECOMMENDATIONS
21
Table 14
HIGHWAY TRUST FUND
PROJECTED REVENUES AND DISTRIBUTIONS: FY1997- 98 THROUGH FY2012- 13
Actual Projected Revenues Using A 3.00% Inflation Factor
1997
Net
Revenues
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TOTAL
REVENUE ( in dollars)
TITLE FEES 73,029,553 75,220,440 77,477,053 79,801,364 82,195,405 84,661,267 87,201,105 89,817,139 92,511,653 95,287,002 98,145,612 101,089,981 104,122,680 107,246,361 110,463,751 113,777,664 117,190,994 1,516,209,471
LIEN RECORDING 2,443,177 2,516,472 2,591,966 2,669,725 2,749,817 2,832,312 2,917,281 3,004,800 3,094,944 3,187,792 3,283,426 3,381,928 3,483,386 3,587,888 3,695,524 3,806,390 3,920,582 50,724,233
GASOLINE TAX 243,731,232 251,043,169 258,574,464 266,331,698 274,321,649 282,551,298 291,027,837 299,758,672 308,751,433 318,013,976 327,554,395 337,381,027 347,502,457 357,927,531 368,665,357 379,725,318 391,117,077 5,060,247,358
HIGHWAY USE TAX 407,577,335 419,804,655 432,398,795 445,370,759 458,731,881 472,493,838 486,668,653 501,268,712 516,306,774 531,795,977 547,749,856 564,182,352 581,107,823 598,541,057 616,497,289 634,992,208 654,041,974 8,461,952,603
MISCELLANEOUS
REGISTRATION FEES
10,244,618 10,551,957 10,868,515 11,194,571 11,530,408 11,876,320 12,232,610 12,599,588 12,977,576 13,366,903 13,767,910 14,180,947 14,606,376 15,044,567 15,495,904 15,960,781 16,439,604 212,694,537
INTEREST ON FUNDS INVESTED
BY TREASURER
35,719,382 36,790,963 37,894,692 39,031,533 40,202,479 41,408,553 42,650,810 43,930,334 45,248,244 46,605,692 48,003,863 49,443,978 50,927,298 52,455,117 54,028,770 55,649,633 57,319,122 741,591,081
SUBTOTAL REVENUES 772,745,297 795,927,656 819,805,485 844,399,650 869,731,639 895,823,588 922,698,296 950,379,245 978,890,624 1,008,257,342 1,038,505,062 1,069,660,213 1,101,750,020 1,134,802,521 1,168,846,595 1,203,911,994 1,240,029,353 16,043,419,283
TRANSFER FROM THE
HIGHWAY FUND
32,300,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 608,000,000
TOTAL REVENUES 805,045,297 833,927,656 857,805,485 882,399,650 907,731,639 933,823,588 960,698,296 988,379,245 1,016,890,624 1,046,257,342 1,076,505,062 1,107,660,213 1,139,750,020 1,172,802,521 1,206,846,595 1,241,911,994 1,278,029,353 16,651,419,283
Less Statutory Requirements
42.857% title fee collections 31,298,275 32,237,224 33,204,341 34,200,471 35,226,485 36,283,279 37,371,778 38,492,931 39,647,719 40,837,151 42,062,265 43,324,133 44,623,857 45,962,573 47,341,450 48,761,693 50,224,544 649,801,894
Administration 22,046,617 25,060,476 26,041,790 27,052,544 28,093,620 29,165,929 30,270,407 31,408,019 32,579,760 33,786,652 35,029,752 36,310,145 37,628,949 38,987,317 40,386,437 41,827,530 43,311,856 536,941,183.91
Transfer to General Fund 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 2,720,000,000
Total Statutory Requirements 223,344,892 227,297,700 229,246,131 231,253,015 233,320,105 235,449,208 237,642,185 239,900,950 242,227,479 244,623,803 247,092,017 249,634,278 252,252,806 254,949,890 257,727,887 260,589,223 263,536,400 3,906,743,077
Adjusted Revenue to be
Distributed as Follows
581,700,405 606,629,956 628,559,354 651,146,635 674,411,534 698,374,380 723,056,111 748,478,295 774,663,145 801,633,539 829,413,045 858,025,935 887,497,214 917,852,631 949,118,708 981,322,771 1,014,492,953 12,744,676,206
Interstate @ 61.95% 360,363,400 375,807,258 389,392,520 403,385,341 417,797,946 432,642,929 447,933,261 463,682,304 479,903,818 496,611,977 513,821,381 531,547,067 549,804,524 568,609,705 587,979,040 607,929,456 628,478,385 7,895,326,912
Urban Loops @ 25.05% 145,715,951 151,960,804 157,454,118 163,112,232 168,940,089 174,942,782 181,125,556 187,493,813 194,053,119 200,809,202 207,767,968 214,935,496 222,318,052 229,922,084 237,754,236 245,821,355 254,130,484 3,192,541,390
State Aid to Municipalities @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Secondary Roads @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,841 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Total Adjusted Revenues 581,700,404 606,629,956 628,559,354 651,146,635 674,411,534 698,374,380 723,056,111 748,478,295 774,663,145 801,633,539 829,413,045 858,025,935 887,497,214 917,852,631 949,118,708 981,322,771 1,014,492,953 12,744,676,206
Trust Fund Revenue Distributions
Interstate @ 61.95% 360,363,400 375,807,258 389,392,520 403,385,341 417,797,946 432,642,929 447,933,261 463,682,304 479,903,818 496,611,977 513,821,381 531,547,067 549,804,524 568,609,705 587,979,040 607,929,456 628,478,385 7,895,326,912
Urban Loops @ 25.05% 145,715,951 151,960,804 157,454,118 163,112,232 168,940,089 174,942,782 181,125,556 187,493,813 194,053,119 200,809,202 207,767,968 214,935,496 222,318,052 229,922,084 237,754,236 245,821,355 254,130,484 3,192,541,390
State Aid to Municipalities @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Secondary Roads
@ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
@ 42.857% 31,298,275 32,237,223 33,204,341 34,200,471 35,226,485 36,283,279 37,371,778 38,492,931 39,647,719 40,837,151 42,062,265 43,324,133 44,623,857 45,962,573 47,341,450 48,761,693 50,224,544 649,801,894
Total Secondary Roads 69,108,802 71,668,170 74,060,699 76,525,002 79,063,235 81,677,614 84,370,425 87,144,020 90,000,823 92,943,331 95,974,113 99,095,819 102,311,176 105,622,994 109,034,166 112,547,673 116,166,586 1,478,205,847
Total Revenue
Distributions
612,998,680 638,867,179 661,763,695 685,347,106 709,638,020 734,657,660 760,427,889 786,971,226 814,310,864 842,470,690 871,475,310 901,350,068 932,121,071 963,815,204 996,460,158 1,030,084,464 1,064,717,497 13,394,478,100
Combined Intrastate/ Urban
Expenditure Projections ( see Note)
605,273,000 623,431,000 642,134,000 661,398,000 681,240,000 701,677,000 722,727,000 744,409,000 766,741,000 789,744,000 813,436,000 837,839,000 862,974,000 888,864,000 915,529,000 942,995,000 12,200,411,000
Total Intrastate/ Urban Revenue
Availability
527,768,062 546,846,638 566,497,573 586,738,035 607,585,711 629,058,817 651,176,117 673,956,937 697,421,179 721,589,349 746,482,563 772,122,576 798,531,789 825,733,276 853,750,811 882,608,869 11,087,868,302
Overages ( Shortages) ( 77,504,938) ( 76,584,361) ( 75,636,427) ( 74,659,965) ( 73,654,289) ( 72,618,183) ( 71,550,883) ( 70,452,063) ( 69,319,821) ( 68,154,651) ( 66,953,437) ( 65,716,424) ( 64,442,211) ( 63,130,724) ( 61,778,189) ( 60,386,131) ( 1,112,542,698)
NOTE: The projections for inflation and project growth are those used by Peat Marwick, LLP, in the audit of the Department of Transportation released in May, 1998. “ Project growth” refers to unanticipated changes to the project such as increased costs for environmental impact or increased costs as the result of terrain.
Source: DOT Financial Statements for 1997 figures; OSA projections for remainder of table
FINDINGS AND RECOMMENDATIONS
22
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FINDINGS AND RECOMMENDATIONS
23
Source: Transportation Improvement Program,
FY1997- 98 through FY2003- 2004
TRUST FUND
6.2%
OTHER
93.8%
162
2458
NUMBER OF PROJECTS
ROJECT STATUS
Objective: To identify the Trust Fund projects as contained in
legislation, determine the status of each project, compare original
cost and time estimates to current estimates, and estimate
completion dates based on data available.
In 1989, the General Assembly mandated specific roadways be constructed or improved as
part of the Trust Fund. Table 2, page 8, lists the 28 Intrastate System routes identified for
inclusion in the Highway Trust Fund program; the 7 urban loops are listed in Table 3, page
8. Since the legislation was passed, the estimated mileage has been amended for several of
the projects. Mileage for intrastate routes has been increased from 1844.2 miles estimated
in 1989 to 1847.929 miles as of December 31, 1997. Mileage for urban loops has been
increased from the 1989 estimate of 205.4 to 225.924 miles in December 1997. Overall,
this is only a 1.2% increase in mileage. Table 15, page 24, shows each project and its
status as of December 31, 1997. As discussed in the “ Background” section, specific
revenue sources were identified for the purpose of funding these improvements. Trust
Fund projects account for only 6% of the total projects included in the fiscal year 1997- 98
through 2003- 2004 TIP, but constitute approximately 55% of the projected costs in the
TIP. ( See Exhibit 8.)
The Trust Fund legislation gives the Department authority to “. . . . add a route to the
Intrastate System if the route is a multilane route and has been designed and built to meet
the construction criteria of the Intrastate System projects. No funds may be expended
from the Trust Fund on routes added by the Department.” However, the Department has,
and should, update the list of qualified Trust Fund projects that fall within the parameters
of projects included in the legislation.
EXHIBIT 8
HIGHWAY TRUST FUND PROJECTS AND COSTS
AS PERCENT OF TOTAL TIP PROJECTS AND COSTS
P
TRUST FUND
55.2%
OTHER
44.8%
$ 11.6
$ 9.4
COSTS ( in billions)
24
TABLE 15
HIGHWAY TRUST FUND - PROJECTS STATUS AS OF DECEMBER 1997
1989 Changes in Miles per TIP Changes in Cost Estimates per TIP
($ in 000)
Trust Fund Cost of Projects
($ in 000)
Percent of
Completion
Route
Prior
Costs*
Estimated
Costs ( 000)
1989
Estimate
Subsequent
Estimate
Increase/
Decrease
1990
Estimate**
Subsequent
Estimate
Increase/
Decrease
Actual **
Expenditures
Est. To
Complete
Total Cost**
Of Project Miles Dollars
I- 40 11,823 88,460 21.4 21.1 ( 0.3) 76,637 184,879 108,242 49,524 135,355 184,879 10% 27%
I- 77 400 35,400 8.9 13.6 4.7 35,000 64,176 29,176 62,338 1,838 64,176 90% 97%
I- 85 139,989 514,927 79.5 78.6 ( 0.9) 374,938 557,347 182,409 361,248 196,099 557,347 75% 65%
I- 95 50 2,260 0.0 0.9 0.9 2,210 3,580 1,370 0 3,580 3,580 100% 0%
US 1 1,994 248,291 100.1 100.9 0.8 246,297 337,027 90,730 186,331 150,696 337,027 55% 55%
US 13 0 104,000 45.9 45.7 ( 0.2) 104,000 164,155 60,155 1,822 162,333 164,155 0% 1%
US 17 29,127 600,405 200.0 220.0 20.0 571,278 995,863 424,585 152,779 843,084 995,863 27% 15%
US 19/( E) 0 98,250 40.0 39.5 ( 0.5) 98,250 145,300 47,050 8,669 136,631 145,300 0% 6%
US 19 19,297 306,477 27.1 27.8 ( 0.7) 287,180 335,195 48,015 3,050 332,145 335,195 9% 1%
US 23 1,037 136,737 30.0 28.9 ( 1.1) 138,700 282,389 143,689 2,235 280,154 282,389 22% 1%
US 23- 441 629 19,929 11.4 11.6 0.2 19,300 32,030 12,730 114,875 0 114,875 100% 100%
US 52 25,010 118,857 22.6 26.0 3.4 93,847 131,116 37,269 116,793 14,323 131,116 99% 89%
US 64/ 264 37,413 366,908 120.0 121.5 1.5 329,495 556,090 226,595 149,655 406,435 556,090 39% 27%
US 64 1,015 152,504 74.9 74.4 ( 0.5) 151,489 231,008 79,519 87,104 143,904 231,008 34% 38%
US 70 30,102 296,312 64.9 66.8 1.9 266,210 444,654 178,444 45,386 399,268 444,654 17% 10%
US 74 60,606 381,944 80.3 75.7 ( 4.6) 321,338 464,164 142,826 135,544 328,620 464,164 26% 29%
US 74 ( A) 22,620 84,220 18.3 18.0 ( 0.3) 61,600 42,435 ( 19,165) 28,104 14,331 42,435 100% 66%
US 158 856 517,737 245.9 249.2 3.3 516,881 662,819 145,938 45,471 617,348 662,819 7% 7%
Bridge ( US 158) 0 39,000 9.9 9.9 0.0 39,000 82,250 43,250 0 82,250 82,250 0% 0%
US 221 25,493 204,093 69.2 68.9 ( 0.3) 178,600 208,319 29,719 21,604 186,715 208,319 8% 10%
US 220 6,517 120,009 30.1 30.8 0.7 113,492 161,184 47,692 75,445 85,739 161,184 46% 47%
US220/ NC68 10,652 88,538 30.7 32.7 2.0 77,886 141,827 63,941 42,835 98,992 141,827 49% 30%
US 264 46,529 207,999 30.3 31.7 1.4 161,470 170,955 9,485 73,611 97,344 170,955 33% 43%
US 321 48,149 158,938 45.5 39.5 ( 6.0) 110,789 149,520 38,731 78,162 71,358 149,520 63% 52%
US 421 29,846 148,046 37.5 36.3 ( 1.2) 118,200 198,726 80,526 132 198,594 198,726 35% 0%
US 421( A) 11,144 171,984 71.0 63.669 ( 7.331) 160,840 321,271 160,431 78,124 243,147 321,271 16% 24%
NC 24- 27 17,809 466,439 195.2 191.551 ( 3.649) 448,630 734,478 285,848 102,172 632,306 734,478 22% 14%
NC 87 13,770 211,395 85.1 85.971 0.871 197,625 247,286 49,661 64,862 182,424 247,286 15% 26%
NC 105 0 34,700 30.0 18.303 ( 11.697) 42,925 52,340 9,415 0 52,340 52,340 20% 0%
NC 168 0 25,589 18.5 18.435 ( 0.065) 25,589 52,635 27,046 38,754 13,881 52,635 66% 74%
INTRASTATE 591,877 5,950,348 1844.2 1847.929 3.729 5,369,696 8,155,018 2,785,322 2,126,629 6,111,234 8,237,863 29% 26%
Asheville 0 99,300 0 3.5 3.5 99,300 118,100 18,800 691 117,409 118,100 0% 1%
Charlotte 49,904 863,016 63.4 72.946 9.546 813,112 969,287 156,175 322,636 646,651 969,287 32% 33%
Durham 0 101,516 16.4 19.499 3.099 101,516 143,036 41,520 845 142,191 143,036 0 0.01
Greensboro 600 315,338 41.6 41.782 0.182 314,738 733,464 418,726 75,416 658,048 733,464 1% 10%
Raleigh Loop 1,590 509,490 39.3 42.636 3.336 507,900 652,066 144,166 190,311 461,755 652,066 13% 29%
Wilmington Bypass 0 108,800 20.2 19.95 ( 2.5) 108,800 328,460 219,660 3,983 324,477 328,460 0% 1%
Winston/ Salem 0 209,856 24.5 25.611 1.111 209,856 428,783 218,927 20,457 408,326 428,783 0% 5%
URBAN LOOPS 52,094 2,207,316 205.4 225.924 20.524 2,155,222 3,373,196 1,217,974 614,339 2,758,857 3,373,196 14% 18%
Leg. Oversight Comm 664 664
Total 643,971 8,157,664 2049.6 2073.853 24.253 7,524,918 11,528,214 4,003,296 2,741,632 8,870,091 11,611,723 27% 24%
Percent Increase 1.2% 53%
Source: General Statutes, Board of Transportation Minutes; DOT Financial Records Notes: * Paid from Highway Fund prior to Trust Fund enactment; ** Exclude costs prior to 1990
FINDINGS AND RECOMMENDATIONS
25
Conclusions: Initial cost estimates for Trust Fund projects were significantly
understated, with Department cost estimates increasing 53% since
1989. While the Deparment has attempted to present more realistic
estimates since 1989, those estimates still do not factor in inflation or
cost overruns9. Trust Fund projects, comprising approximately 55%
of total TIP costs, are significantly affected by underestimated costs.
Additionally, the availability of funds affects the completion date of
Trust Fund projects.
The second major conclusion in this segment is that the Department
was not able to construct Trust Fund projects at the atnticipated rate
during the first five years. Nor was the Department able to
significantly accelerate construction of Trust Fund projects after the
initial five- year spending limitations expired. These factors have had
a significant effect on project completion dates. In our opinion, the
current construction schedule will not allow completion of all Trust
Fund projects by fiscal year 2013, as projected by the Department.
Assuming the magnitude of Trust Fund projects remains as currently
identified, continuation of construction at the current rate will put
the completion date in fiscal year 2018- 19, making it a 29 to 30 year
project.
THE CURRENT CONSTRUCTION SCHEDULE WILL NOT MEET THE
REVISED COMPLETION DATE OF 2013 FOR TRUST FUND PROJECTS.
The initial projection for the completion of Trust Fund projects was 13.5 years, with all
projects being completed by fiscal year 2003. As of December 31, 1997, only three trust
fund projects have been completed. However, there are 7 other projects that could have
been considered Trust Fund projects. Department officials chose not to use any Trust
Fund monies on these projects since it was anticipated they would be completed in a
relatively short period of time. These projects are listed in Table 16.
Table 16
TRUST FUND ELIGIBLE PROJECTS FOR WHICH
NO TRUST FUND MONIES HAVE BEEN EXPENDED
Route TIP ID # County Affected Description Status
I- 40 I- 900 Guilford, Forsyth Construct 21 mile multi- lane freeway added to TIP in
1983; only 3 miles in Guilford would have been eligible
for Trust Fund
Completed 1993
I- 40 I- 100
( changed to I-
40AJ)
Buncombe Identified in TIP as “ Trust Fund” but Board has not
approved any funds for project, nor has any Trust Fund
monies been expended
34% complete
US- 1 R- 501 Vance Widen Henderson Bypass added to TIP 1978; eligible
for Trust Fund
Completed 1992
US- 17 R- 1009 Perquimans Widen US- 17 from north of Hertford to SR 1367 added
to TIP in 1983; eligible for Trust Fund
Completed 1992
US- 64 R- 510 Martin, Washington Widen US- 64 from Jamesville to NC 45 added to TIP in
1978; eligible for Trust Fund
Completed 1990
US- 158 R- 520 Currituck Widen US- 158 from Point Harbor to Barco added to Tip
in 1978; eligible for Trust Fund
Completed 1991
US- 158 R- 2227 Dare Identified in TIP as “ Trust Fund” but Board has not
approved any funds for project, nor has any Trust Fund
monies been expended
Inactive as of 1992
Source: Transportation Improvement Program FY1995 to FY2001; Board minutes; DOT Financial Records
9 The May 1998 Peat Marwick, LLP report on the Department of Transportation found that cost estimates
for the projects contained in the TIP did not include inflation or project growth. Our audit of the Trust
Fund activities confirmed this finding.
FINDINGS AND RECOMMENDATIONS
26
FY89- 98 $ 200,000,000
FY90- 91 $ 250,000,000
FY91- 92 $ 300,000,000
FY92- 93 $ 400,000,000
FY93- 94 $ 500,000,000
.27x = 8 years
x = 8/. 27
x = 29.6 years
Since 1989, Department staff have revised the completion date for Trust Fund projects to
2013, making the Trust Fund a 23 year undertaking. However, for the eight years ending
December 1997, only 27% of the Trust Fund projects estimated to be completed by fiscal
year 2003 had been completed and only 24% of the Trust Fund dollars had been
expended. ( See discussion following for funding issues.) If
construction continues at the same pace, this would mean that it
would take 29.6 years to complete all projects currently identi-fied.
10 Exhibit 9, page 27, depicts the trust fund projects as well
as their status as of December 1997, as supplied by the Department of Transportation.
Examination of Department records showed that environmental considerations, right of
way acquisitions, planning and design requirements, and the number and frequency of
public meetings significantly impact the construction schedule. The majority of these
factors are outside the Department’s control, many being driven by legal requirements.
RECOMMENDATION
The Department should reexamine its construction scheduling proce-dures
to identify areas where delays can be prevented or minimized.
Steps should be taken to ensure that the projected completion date for
each project is realistic.
Auditor’s Note: This finding and recommendation supports the May 1998 Peat
Marwick finding relating to the need for strengthening the construction scheduling
requirements.
THE DEPARTMENT WAS NOT ABLE TO SIGNIFICANTLY ACCELERATE
TRUST FUND CONSTRUCTION AFTER THE EXPIRATION OF THE INITIAL
LIMITATIONS ON CONSTRUCTION EXPENDITURES.
The legislation establishing the Trust Fund placed
limitations on construction obligations for fiscal years
1989- 90 through 1993- 94 as shown on the left. It
appears the limitations were imposed to assure that
construction costs did not exceed revenues collected for
the first years of the Trust Fund. Actual expenditures for
this five- year period did not exceed the limitations, as shown in Exhibit 2, page 13.
According to Department management, only those Trust Fund projects already in the
fiscal years 1989- 90 through 1995- 96 TIP were begun or continued during the first five
years of the Trust Fund program. ( The Trust Fund projects that were in this TIP were at
various stages.) That TIP did not contain all the projects identified in the Trust Fund
legislation. Subsequent revisions to the list of projects included in the TIP added all Trust
Fund projects identified in legislation.
FINDINGS AND RECOMMENDATIONS
FINDINGS AND RECOMMENDATIONS
28
EXHIBIT 9
North Carolina Intrastate System Project Status ( includes Loops)
FINDINGS AND RECOMMENDATIONS
29
FINDINGS AND RECOMMENDATIONS
30
EXHIBIT 10
HIGHWAY TRUST FUND ALLOTMENTS VS. LIMITATIONS: FY89- 90 THROUGH FY93- 94
Source: DOT Financial Records
89- 90 90- 91 91- 92 92- 93 93- 94
FISCAL YEAR
0
100
200
300
400
500
600
$ in Millions
Allotments Limitations
Some factors which initially delayed the beginning of construction included: time
requirements for preliminary planning and engineering, increased environmental impact
requirements, right- of- way acquisitions and public awareness requirements. Department
management stated that new construction projects normally require several years of
preliminary work before construction can actually begin. Many of these factors affected
the Department’s ability to accelerate construction on projects already underway.
Table 17 below shows the differ-ence
between the available funding
and allotments for fiscal years
1989- 90 through 1993- 94. As
shown in Exhibit 10, the
Department did not expend or
obligate the total funds allowed by
the legislation for the first five
years. Through December 31,
1997, the eighth year of the Trust
Fund, the Department had
constructed only 29% of the
intrastate routes and only 14% of
the urban loops identified in the
Trust Fund legislation and had expended only 24% of the Trust Fund monies. For the
Trust Fund to be completed within the original time frame of 13.5 years, approximately
7.4% of the construction should have been completed each year. Therefore, at the end of
1997, the Department should have completed 59.2% of the construction to remain on
schedule. As of June 30, 1998, the Trust Fund had a cash balance of $ 952,524,394 of
which $ 103,329,468 was uncommitted.
Table 17
HIGHWAY TRUST FUND
AVAILABLE FUNDING AND ALLOTMENTS ( in millions)
FY
Net
Revenues
Required
Transfers*
Net
Available
Funding
Total Allot-ments
for
Intrastate/
Urban**
Available Minus
Allotments
89- 90 $ 408.7 $ 252.8 $ 155.9 $ 116.8 $ 39.1
90- 91 514.1 416.1 98.0 249.3 ( 151.3)***
91- 92 537.3 387.7 149.7 41.1 108.6
92- 93 572.0 418.1 153.8 83.3 70.5
93- 94 643.1 445.0 198.1 203.7 ( 5.6)
TOTALS $ 2,675.2 $ 1,919.7 $ 755.5 $ 694.2 $ 61.3
* Required transfers include allotments for administration, aid to municipalities, secondary road construction,
transfers to the highway fund and transfers to the general fund.
** Total allotments include the cities and towns participation and the property owners' participation.
*** The General Assembly required DOT to transfer $ 231,358,005 to the general fund which resulted in the
negative balance.
Source: DOT Financial Records
FINDINGS AND RECOMMENDATIONS
31
EXHIBIT 12
HIGHWAY TRUST FUND
CONSTRUCTION COSTS PER MILE
Source: DOT Fiscal Year Project Reports
2.9
10.5
4.5
14.9
INTRASTATE LOOPS
FISCAL YEAR
0
2
4
6
8
10
12
14
16
$ In Millions
1990 1997
55.2% increase
41.9% increase
Intrastate Increase: 89 to 90 = ( 0.1%)
90 to 97 = 51.9%
Loops Increase: 89 to 90 = ( 0.0%)
90 to 97 = 54.5%
EXHIBIT 11
CHANGES IN HIGHWAY TRUST FUND COSTS PROJECTIONS
Source: Transportation Improvement Program FY1989- 90 to 1995- 96 and FY1997- 98 to FY2003- 04
6
5.4
8.2
2.2
2.2
3.4
1989
1990
1997
FISCAL YEAR
0 2 4 6 8 10
$ in Millions
INTRASTATE LOOPS
RECOMMENDATION
As recommended previously, the Department should identify areas
where construction delays can be prevented or minimized. Steps
should be taken to more closely monitor construction progress to
make sure each project remains on schedule. Additionally,
Department management should accelerate existing projects to the
extent possible. This information should be shared with the Board of
Trustees, members of the General Assembly, and the public.
ESTIMATED COSTS FOR
TRUST FUND PROJECTS
HAVE INCREASED 53%
SINCE 1989.
In 1989 when the Trust Fund
was established, the projected
costs for the intrastate routes
was $ 5.4 billion for 28 routes
totaling 1,844.2 miles as shown
on Table 15, page 24. The
original projected costs for the 7
urban loops were $ 2.2 billion for
205.4 miles. The Department’s
most recent estimates of project
costs ( December 1997) were
$ 8.2 billion and $ 3.4 billion, respectively. Exhibit 11 compares original estimated costs to
current estimates. This represents a 53% increase in costs over the eight- year life of the
Trust Fund.
There are a number of reasons for
these increases. Original cost
projections were done using the
historical average cost per mile for
construction only and did not con-sider
any preliminary engineering
costs, inflation, and/ or cost over-runs.
Overruns can be caused by
adding additional mileage to the
project, specific needs related to
terrain, or changes in environ-mental
regulations. Examination
of expenditure records showed
that urban loops are more expensive per mile than construction on intrastate routes.
Exhibit 12 depicts the difference in cost per mile. Generally, intrastate routes are being
FINDINGS AND RECOMMENDATIONS
32
improved by adding lanes to existing highways. Urban loops, on the other hand, generally
have to be planned, designed, and constructed in areas where no roadway exists. This
process requires more up- front costs such as environmental studies and more extensive
purchase of land from property owners.
RECOMMENDATION
The Department should review its methodology for determining
project costs. The methodology should include consideration of all
relevant costs, including preliminary engineering costs, cost overruns,
and a conservative estimate for inflation. As discussed on page 19, we
estimate revenues to be short of the funds needed to complete the
currently identified Trust Fund intrastate and urban loop projects by
$ 1.1 billion through fiscal year 2012- 13.
Auditor’s Note: In its May 1998 report, Peat Marwick found that 31% of all
construction contracts in the last 10 years were not completed on schedule. Frequently,
projects that are not completed on schedule also experience cost overruns due to
increased materials costs. After examination of this issue, Peat Marwick recommended
that the Department strengthen its procedures for monitoring and managing
construction projects.
FINDINGS AND RECOMMENDATIONS
33
Example: Chatham County: 150 miles of unpaved state-maintained
roads. State: 10,000 miles of unpaved state-maintained
roads. Allocation in this example, Chatham County
would receive $ 1,030,050 ( 1.5% of $ 68.67 million).
Example: Chatham County: 40 miles of unpaved state-maintained
roads with a vehicular count of at least 50
vehicles per day. State: 4,000 miles of unpaved state-maintained
roads with a vehicular count of at least 50
vehicles per day. Allocated funds in excess of $ 68.67
million = $ 40 million. Allocation in this example,
Chatham County would receive $ 400,000 ( 1% of $ 40
million).
ECONDARY ROADS
Objective: To examine progress on completing paving of
secondary roads.
Revenue to support the secondary roads program comes from the Trust Fund ( 6.5%
allocation) and $ 15 of all motor vehicle title fees collected. GS § 136- 44.5 describes the
distribution of revenues to the respective counties. That statute requires the Department
to make an annual study of all state- maintained unpaved roads to determine the:
· number of miles of unpaved state- maintained roads in each county;
· total number of miles of unpaved state- maintained roads in the State;
· number of miles of unpaved state- maintained roads in each county that have vehicular traffic
of at least 50 vehicles a day; and
· the total number of miles of unpaved state- maintained roads statewide that have vehicular
traffic of at least 50 vehicles a day.
Except for federal- aid programs, the Department allocates all secondary construction
funds on the basis of a formula using the study figures determined above. Of the first
$ 68,670,000 in allocated funds, each county receives a percentage equal to the number of
miles of unpaved state-maintained
roads in the
county in proportion to the
total number of miles of
unpaved state- maintained
miles in the State.
If funds exceed $ 68,670,000, each county receives a percentage equal to the number of
miles of unpaved state- maintained
roads in the county with a traffic
count of at least 50 vehicles per day
in proportion to the number of
miles of unpaved state- maintained
roads in the State with a traffic
vehicular count of at least 50
vehicles per day.
Conclusions: The Department will not be able to meet the statutory
requirements set in the Trust Fund legislation regarding paving
of all secondary roads with a traffic count of at least 50 vehicles
per day by 1999. Our projections show secondary roads with 50+
vehicles a day will not all be paved until fiscal year 2004, with the
remaining secondary roads paved by fiscal year 2011.
S
FINDINGS AND RECOMMENDATIONS
34
EXHIBIT 13
MILES OF UNPAVED SECONDARY ROADS BY FISCAL YEAR
Source: DOT Highway and Road Mileage Report
BEGIN 89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
FISCAL YEAR
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
MILES
50+ VEHICLES TOTAL MILES
50+ VEHICLES 10475 9750 9025 8297 7626 6842 6114 5958 5232
TOTAL MILES 15948 14993 14144 13476 12900 12133 11424 10792 9972
EXHIBIT 14
MILES OF SECONDARY ROADS PAVED vs. DEPARTMENT GOALS
Source: DOT Highway and Road Mileage Report
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
FISCAL YEAR
0
200
400
600
800
1000
MILES
50+ VEHICLES TOTAL
50+ VEHICLES 725 725 728 671 784 728 156 726
TOTAL 815 893 808 753 824 863 870 810
755 805 771 858 858 854 902 858 GOAL
THE ANNUAL PAVING GOALS FOR SECONDARY ROADS WILL NOT MEET
THE STATUTORY TIME REQUIREMENTS.
In 1989, North Carolina
had 15,948 miles of
unpaved state- main-tained
roads, 10,475
miles of which were
roads with a traffic
count of 50 vehicles or
more per day. GS
§ 136- 182 requires the
Department to pave, by
fiscal year 1999, all un-paved
state- maintained
roads with a traffic
vehicular count of 50 or
more vehicles per day.
( See related finding on
page 35.) This means the Department should have paved approximately 1,050 miles of
secondary roads per
year to achieve this
goal. As shown in
Exhibits 13 and 14,
the annual paving
goals set by the
Department were
not sufficient to
meet the 1999 dead-line,
with only 6,661
miles planned for
paving through
fiscal year 1996- 97.
The Department has
actually paved a
total of 6,636 miles,
of which 5,243 miles were for roads with 50+ vehicles, or only 62.4% of the necessary
miles. This leaves some 5,232 miles of roads with 50+ vehicles still to pave at December
31, 1997.11 ( See finding on page 37.) As shown in Table 18, all unpaved secondary roads
would not be completed, based on the Department’s average rate of paving, until fiscal
year 2011. The goal of paving all secondary roads with 50 or more vehicles per day
would not be reached until fiscal year 2004, again using the Department’s average rate for
paving through fiscal year 1996- 97. While the main factor in not achieving the paving
mandate has been setting the paving goal too low, a factor contributing to the delay is the
11 The Department has increased its paving goals for secondary roads for FY97- 98 to 1,155 miles.
FINDINGS AND RECOMMENDATIONS
35
Table 18
SCHEDULE OF UNPAVED SECONDARY ROADS
As of December 1997
( bold numbers indicate projected values)
Total Unpaved Secondary Miles Unpaved Miles Of
50+ Vehicles
Year
End
June 30
Actual
Miles
Paved
Net
Change
Additions
( Removals)
To System
Total
Unpaved
Miles
Miles
Paved
Each
Year
Total
Miles
Begin 89 15,948 10,475
1990 815 ( 140) 14,993 725 9,750
1991 893 44 14,144 725 9,025
1992 808 140 13,476 728 8,297
1993 753 177 12,900 671 7,626
1994 824 57 12,133 784 6,842
1995 863 154 11,424 728 6,114
1996 870 238 10,792 156 5,958
1997 810 ( 10) 9,972 726 5,232
1998 830 85 9,227 655 4,577
1999 830 85 8,482 655 3,922
2000 830 85 7,737 655 3,267
2001 830 85 6,992 655 2,612
2002 830 85 6,247 655 1,957
2003 830 85 5,502 655 1,302
2004 830 85 4,757 647 0
2005 830 85 4,012
2006 830 85 3,267
2007 830 85 2,522
2008 830 85 1,777
2009 830 85 1,032
2010 830 85 287
2011 372 85 0
Source: DOT Highway and Road Mileage Report; OSA projections in bold
continual change in the number of miles of unpaved state- maintained roads. New unpaved
roads ( including new housing subdivisions) continue to be accepted into the state-maintained
system increasing the total mileage. Conversely, municipal expansions of
corporate limits reduce the total mileage to be paved. Approximately 85 miles of unpaved
new roads per year have been added to the state- maintained system since the Trust Fund
began.
RECOMMENDATION
Department management
should request a modifi-cation
to the legislation
for a more realistic date
to complete paving of
secondary roads with
50+ vehicles per day traf-fic.
The Department
should take steps to
modify its time goal for
paving all unpaved sec-ondary
roads with traffic
of 50 or more vehicles
per day. Maximum
effort should be extended
to pave as many miles of
the mandated secondary
roads as possible each
year.
Auditor’s Note: The State Auditor is in the process of reviewing operations at
maintenance units. Maintenance units are responsible for paving secondary roads.
FINDINGS AND RECOMMENDATIONS
36
UNDER CURRENT BOARD POLICY, THE DEPARTMENT WILL NOT BE
ABLE TO PAVE ALL UNPAVED SECONDARY ROADS WITH 50+ VEHICLE
TRAFFIC.
The Department of Transportation accepted all existing unpaved secondary roads into the
state- maintained system in 1931. A number of these roads were accepted with only a
“ ditch- to- ditch” right of way. At the time they were accepted, there was no statutory
requirement that the Department acquire right- of- ways. In 1959, the General Assembly
passed legislation ( GS § 47- 27) that requires the Department to record deeds of easement
with the local Register of Deeds office. The Board of Transportation adopted policy
requiring that all unpaved roads accepted into the state- maintained system include the
appropriate right- of- way easement, approximately 30 feet on each side. It is also Board
policy that all property owners on any unpaved secondary road must donate the right- of-way
before the Department will pave it. Thus far, Department personnel have identified
through the priority ranking system ( see finding on page 37) 1,171 roads constituting
approximately 822 miles of unpaved roads in the system which do not meet the right- of-way
requirements for paving. Of these, approximately 726 miles are for roads with a
traffic vehicle count of 50+, as shown in Table 19, page 36. Therefore, the Department
cannot meet the statutory requirement of paving all unpaved roads in the State with a
daily traffic vehicle count of 50+.
RECOMMENDATION
The Department should immediately undertake identifying all state-maintained
unpaved secondary roads that do not have the
appropriate right- of- ways. This information should also contain data,
where known by the Department, regarding the willingness of
property owners to donate the right- of- ways. This information should
be used as a basis for requesting modification of the Trust Fund
legislation requiring the paving of all secondary roads with a daily
traffic vehicle count of 50+. ( See previous recommendation.)
FINDINGS AND RECOMMENDATIONS
37
Table 19
SUMMARY OF SECONDARY ROADS WITH IDENTIFIED UNAVAILABLE RIGHT- OF- WAY
DIV.
COUNTY
TOTAL
NUMBER
LENGTH OF
ROADS
WITH 50+
VEHICLE
TRAFFIC
TOTAL
MILEAGE WITH
UNAVAILABLE
RIGHT- OF- WAY DIV.
COUNTY
TOTAL
NUMBER
LENGTH
OF ROADS
WITH 50+
VEHICLE
TRAFFIC
TOTAL
MILEAGE WITH
UNAVAILABLE
RIGHT- OF- WAY
1 Bertie 6 4.50 11.20 8 Chatham 18 12.42 13.12
Camden 11 6.59 7.92 Hoke 6 4.39 6.29
Chowan 3 0.90 1.50 Lee 5 1.00 1.21
Currituck 10 5.36 5.71 Montgomery 3 2.90 2.90
Dare 0 0.00 0.00 Moore 20 11.25 14.69
Gates 12 12.65 14.16 Randolph 14 5.54 5.74
Hertford 4 3.80 7.50 Richmond 10 4.94 5.60
Hyde 12 6.76 11.64 Scotland 19 11.18 16.71
Martin 3 4.90 4.90 Division Totals 95 53.62 66.26
Northampton 12 12.20 14.33 9 Davidson 15 6.32 6.99
Pasquotank 5 2.65 2.65 Davie 14 10.31 12.65
Perquimans 1 0.63 0.63 Forsyth 22 7.32 8.27
Tyrrell 7 1.30 6.10 Rowan 8 3.71 4.06
Washington 1 1.20 1.20 Stokes 12 6.19 6.90
Division Totals 87 63.44 89.44 Division Totals 71 33.85 38.87
2 Beaufort 10 7.90 8.60 10 Anson 4 1.05 4.25
Carteret 1 1.06 1.06 Cabarrus 0 0.00 0.00
Craven 1 0.40 0.40 Mecklenburg 8 2.62 3.92
Greene 0 0.00 0.00 Stanly 2 1.10 1.10
Jones 2 1.30 1.49 Union 4 2.80 2.80
Lenoir 1 0.60 0.60 Division Totals 18 7.57 12.07
Pamlico 4 1.21 1.43 11 Alleghany 9 7.93 8.88
Pitt 2 0.00 1.20 Ashe 15 10.20 10.40
Division Totals 21 12.47 14.78 Avery 16 7.07 7.19
3 Brunswick 6 2.64 2.64 Caldwell 18 6.80 6.92
Duplin 12 7.63 8.23 Surry 12 1.47 2.13
New Hanover 2 0.78 0.78 Watauga 23 21.53 25.09
Onslow 3 1.00 1.10 Wilkes 12 5.22 5.87
Pender 8 5.49 6.26 Yadkin 4 2.09 2.24
Sampson 2 1.60 1.60 Division Totals 109 62.31 68.72
Division Totals 33 19.14 20.61 12 Alexander 0 0.00 0.00
4 Edgecombe 1 1.50 1.50 Catawba 0 0.00 0.00
Halifax 18 13.89 14.12 Cleveland 1 0.00 0.20
Johnston 12 11.96 12.50 Gaston 0 0.00 0.00
Nash 1 0.60 0.60 Iredell 8 6.53 6.89
Wayne 1 1.20 1.20 Lincoln 8 0.00 0.00
Wilson 4 2.30 3.00 Division Totals 17 6.53 7.09
Division Totals 37 31.45 32.92 13 Buncombe 18 4.80 6.03
5 Durham 1 0.26 0.26 Burke 13 4.19 4.32
Franklin 1 0.10 0.10 Madison 13 9.14 9.94
Granville 1 2.00 2.00 McDowell 19 6.35 6.90
Person 5 1.40 1.55 Mitchell 11 6.92 6.92
Vance 1 0.70 0.70 Rutherford 7 1.54 2.19
Wake 5 4.14 4.14 Yancey 13 9.45 9.45
Warren 3 1.82 1.82 Division Totals 94 42.39 45.75
Division Totals 17 10.42 10.57 14 Cherokee 25 14.18 14.96
6 Bladen 15 20.59 20.89 Clay 22 10.80 12.66
Columbus 23 19.07 19.76 Graham 17 10.03 12.35
Cumberland 16 14.76 14.76 Haywood 50 29.59 30.29
Harnett 19 12.55 13.26 Henderson 50 40.05 40.67
Robeson 67 54.43 67.95 Jackson 59 34.52 36.36
Division Totals 140 121.40 136.62 Macon 78 57.11 58.92
7 Alamance 8 2.98 3.00 Polk 16 8.58 10.68
Caswell 7 5.95 6.65 Swain 28 10.00 12.71
Guilford 21 6.45 6.99 Transylvania 12 7.07 7.40
Orange 18 8.32 8.37 Division Totals 357 221.93 237.0
Rockingham 29 15.85 16.65
Division Totals 83 39.55 41.66 GRAND TOTALS 1,171 726.07 822.36
Source: DOT, Division of Secondary Roads
FINDINGS AND RECOMMENDATIONS
38
EXHIBIT 15
PRIORITY SYSTEM FOR PAVING OF SECONDARY ROADS
Points
Land Use and Public Service Characteristics:
Homes ( 6 points each [ seasonal homes 3])
Schools ( 10 points each)
Churches ( 10 points each)
Businesses ( 10 points each)
Industries ( 10 points each)
Recreational Facilities ( 5 points each)
Sub- Total
Sub- Total divided by length of road ( not less than 1 mile)
Traffic Characteristics
School Bus Route ( 10 points)
Average Annual 24- hour traffic volume
Total
General Route Characteristics
Value of the road as a County Thoroughfare ( 10 points)
TOTAL OF THE THREE CHARACTERISTICS
Source: DOT Division of Secondary Roads
DEPARTMENT PROCEDURES FOR PRIORITIZING THE PAVING OF
SECONDARY ROADS HAVE NOT ASSURED COMPLIANCE WITH
STATUTES.
The Department uses a
“ points rating system” to
schedule paving of unpaved
state- maintained roads. Each
unpaved road is evaluated by
the Department’s Division
personnel and is awarded
points based on three cate-gories
of impact as shown in
Exhibit 15.
The unpaved roads within a
county are then ranked
according to total points, and
the top 10 roads are listed on
the annual work plan for the
county. ( See Auditor’s Note page 34.) The priority list for paving of secondary roads
becomes a public document at this point. When a secondary road in a county is placed on
the “ to be paved list”, it cannot be removed until it is paved. It is Department policy that
all secondary roads in a county be paved, insofar as possible, in the priority order of the
list. When a road is paved, it is removed from the list and the next highest ranked
secondary road is moved up. The local Board of County Commissioners may recommend
to the Board of Transportation deviations in the paving projects and/ or the priority of
paving projects after holding a pre- announced public meeting. Any recommendation for a
deviation must state the specific reason( s). The Board of Transportation considers such
recommendations in light of compatibility with its general plans, standards, criteria, and
available funds, while giving due regard to development plans of the county and to the
maintenance and improvement needs of all existing roads in the county. As seen in the
finding on page 34, this process has not worked to assure compliance with the statutory
requirement of having all unpaved roads with 50+ vehicle traffic paved by 1999.
RECOMMENDATION
Department management should review the procedures for
prioritizing secondary roads for paving, identifying any changes
needed. Further, Department, Division, and District management
should more closely monitor each county maintenance unit’s progress
in paving secondary roads with 50+ vehicle traffic.
FINDINGS AND RECOMMENDATIONS
39
RUST FUND EXPENDITURES AND TRANSFERS
Objective: To examine Trust Fund procedures for expenditure and
transfer of funds, including the use of administrative funds and the
number and type of positions charged to the Trust Fund.
The Highway Fund requests monthly reimbursement from the Federal Highway
Administration for the federal matching funds on approved projects. Once the federal
matching funds are received, the money is deposited in the Highway Fund. Table 20, page
39 shows the actual expenditure transfers from the Highway Trust Fund to the Highway
Fund for construction of intrastate and urban loop projects. At June 30, 1997, the Trust
Fund had a cash balance of $ 701,621,362. The same general procedures are followed for
the Trust Fund administrative monies in that the actual payments are made by the Highway
Fund, which is reimbursed by the Trust Fund. ( See Table 23, page 42.)
To examine the procedures used in the expenditure and transfer of Trust Fund monies, we
reviewed a sample of transfers and expenditures from fiscal years 1989- 90 to 1997- 98.
Additionally, we reviewed existing policies and procedures governing the use of Trust
Fund monies. To determine the number and type of positions charged to the Trust Fund,
we examined organizational charts, position descriptions, and payroll data. We discussed
with Department management in detail the functions and duties assigned to positions
supported with Trust Fund monies.
Conclusions: Allowing the Trust Fund to be reimbursed any federal matching funds
for qualifying Trust Fund projects would provide additional funds to
reduce the completion timeframe for Trust Fund projects. However,
this change would require a major policy shift in the State’s
transportation priorities. Such a change would need to be carefully
considered by the General Assembly and the Department.
Additionally, administrative expenditures for the Trust Fund and the
Highway Fund are lumped together, not accounted for separately.
The Highway Trust Fund pays for 1,133 positions located throughout
the Department’s organizational structure due to the many functions
necessary to support the planning, administering, designing, and
constructing of the Trust Fund projects. While “ work order” ( field)
positions perform duties directly related to Trust Fund projects,
administrative positions funded by the Trust Fund provide support
for both Trust Fund and Highway Fund projects. Administrative
positions are not required to capture the time spent on each type
fund, nor has the Department prepared a formal plan for the
reduction or reassignment of Trust Fund positions as the projects are
completed. Lastly, the Department does not have written procedures
for expenditure of Trust Fund monies.
T
FINDINGS AND RECOMMENDATIONS
40
Table 20
HIGHWAY TRUST FUND
ACTUAL TRANSFERS TO THE HIGHWAY FUND FOR CONSTRUCTION PROJECTS
Fiscal Year
89- 90
Fiscal Year
90- 91
Fiscal Year
91- 92
Fiscal Year
92- 93
Fiscal Year
93- 94
Fiscal Year
94- 95
Fiscal Year
95- 96
Fiscal Year
96- 97
July $ $ $ 35,484,699 $ $ $ $ $
Aug. 35,486,742 8,970,063 36,308,767 21,501,142
Sept 21,199,099 26,653,398 19,739,455 21,758,802 12,545,632 46,792,488
Oct. 26,760,736 5,259,471 9,193,369 16,797,475 53,395,864 18,927,293
Nov. 10,016,723 8,498,105 37,136,517 23,094,368 9,758,206 4,603,601
Dec. 14,765,778 18,030,111 14,733,425 20,390,808 6,529,394
Jan 6,983,062 10,746,824 6,540,693 14,436,529 18,034,879 14,450,098
Feb. 27,116,077 11,524,698 3,335,160 5,950,835 14,481,637 13,540,853 8,808,248 25,727,213
March 19,924,000 6,005,136 11,294,157 6,092,031 4,908,025 19,069,728
April 27,087,828 9,304,674 9,890,864 10,384,242 25,039,914 3,334,869
May 2,924,000 14,174,535 6,986,403 18,573,400 18,152,933 19,199,402 38,888,512
June 21,094,032 9,015,202 34,720,939 33,110,281 30,716,067 38,818,911 11,194,277 27,450,317
Total $ 48,210,109 $ 112,799,206 $ 145,838,217 $ 127,280,905 $ 184,566,333 $ 214,118,336 $ 204,776,397 $ 205,773,513
Cumulative $ 48,210,109 $ 161,009,315 $ 306,847,532 $ 434,128,437 $ 618,694,770 $ 832,813,106 $ 1,037,589,503 $ 1,243,363,016
Fiscal Year Intrastate Urban Total
1989- 90 $ 40,393,052 $ 7,817,057 $ 48,210,109
1990- 91 68,877,280 43,921,926 112,799,206
1991- 92 67,954,052 77,884,165 145,838,217
1992- 93 74,932,473 52,348,432 127,280,905
1993- 94 104,520,993 80,045,340 184,566,333
1994- 95 109,949,086 104,169,250 214,118,336
1995- 96 147,603,619 57,172,778 204,776,397
1996- 97 107,658,169 98,115,344 205,773,513
Total $ 721,888,723 $ 521,474,292 $ 1,243,363,016
FINDINGS AND RECOMMENDATIONS
41
Table 21
HIGHWAY TRUST FUND AUTHORIZED EXPENDITURES BY ROUTE
For 1989 through 1997
Project Federal Trust Fund Total
INTRASTATE ROUTES
I- 40 $ 33,784,997 $
17,903,311
$
51,688,308
I- 77 22,546,250 39,863,548 62,409,798
I- 85 277,311,065 84,163,812 361,474,877
US 1 35,504,651 147,973,982 183,478,633
US 13 900,000 2,055,000 2,955,000
US 158 980,000 25,184,221 26,164,221
Bridge US 158 0 2,100,000 2,100,000
US 17 76,450,116 168,687,012 245,137,128
US 19 9,915,669 32,762,867 42,678,536
US 220 40,448,953 42,255,683 82,704,636
US 220/ NC 68 5,747,701 46,366,258 52,113,959
US 221 6,640,000 15,495,000 22,135,000
US 23 38,088,226 20,984,313 59,072,539
US 23/ 44 5,449,600 28,275,744 33,725,344
US 264 62,178,661 33,188,040 95,366,701
US 321 55,099,855 49,796,298 104,896,153
US 421 10,160,000 103,185,786 113,345,786
US 421A 17,419,535 5,388,513 22,808,048
US 52 30,544,420 98,355,810 128,900,230
US 64 79,236,305 53,948,435 133,184,740
US 64/ 264 18,639,326 174,806,245 193,445,571
US 70 14,018,564 30,600,768 44,619,332
US 74 43,693,610 196,864,550 240,558,160
US 74A 15,583,551 18,152,320 33,735,871
NC 24 28,913,230 85,737,246 114,650,476
NC 87 27,276,807 49,776,386 77,053,193
NC 105 3,553,562 1,198,502 4,752,064
NC 168 0 52,486,417 52,486,417
STATEWIDE 0 750,000 750,000
Intrastate Totals $ 960,084,654 $ 1,628,306,067 $ 2,588,390,721
37.1% 62.9% 100.0%
LOOPS
Asheville Loop $ 520,000 $
130,000
$
650,000
Charlotte Loop 271,364,938 151,382,221 422,747,159
Durham Loop 0 1,800,000 1,800,000
Greensboro Loop 57,092,288 125,238,704 182,330,992
Raleigh Loop 186,534,616 106,889,365 293,423,981
Wilmington Bypass 3,200,000 7,760,000 10,960,000
Winston/ Salem Loop 13,200,000 24,745,000 37,945,000
Loop Totals $ 531,911,842 $
417,945,290
$
949,857,132
56.0% 44.0% 100.0%
GRAND TOTALS $ 1,491,996,496 $ 2,046,251,357 $ 3,538,247,853
FEDERAL MATCHING FUNDS RECEIVED FOR TRUST FUND PROJECTS
ARE DEPOSITED INTO THE HIGHWAY FUND ACCOUNT.
Each year the Depart-ment
requests approval
from the Federal High-way
Adminisration for
federal matching funds
for qualifying projects,
including Trust Fund
projects. The typical
funding ratio is 80% fed-eral
and 20% State funds
for all federally approved
work orders. As expen-ditures
are incurred on
federally approved Trust
Fund work orders, the
Department pays the bills
through the Highway
Fund with State funds.
At the end of each
month, the Trust Fund
reimburses the Highway
Fund total costs for Trust
Fund projects. Each
month, the Department
requests reimbursement
from the federal govern-ment
for expenditures on
federally approved work
orders, including Trust
Fund work orders. Cur-rently,
the Department
deposits federal matching
funds received for Trust
Fund projects into the
Highway Fund, not back
into the Trust Fund. GS
§ 136- 176( c) says that the
Secretary may transfer “ .
the amount of federal
funds received [ for a Trust Fund project] plus the amount of any funds from the Highway
Fund that were used to match the federal funds . . .” from the Trust Fund to the Highway
FINDINGS AND RECOMMENDATIONS
42
Table 22
TRUST FUND ADMINISTRATIVE FUNDS
Fiscal
Year
Total Administrative
Funds Available
Expenditures
And/ Or Transfers
Amount
Reverted To
Trust Fund
89- 90 $ 10,726,814 $ 10,150,000 $ 576,814
90- 91 11,922,106 11,141,990 780,116
91- 92 14,393,401 13,160,822 1,232,579
92- 93 15,843,011 13,171,828 2,671,183
93- 94 18,997,668 15,711,750 3,285,918
94- 95 20,731,248 15,080,459 5,650,789
95- 96 20,996,319 15,923,483 5,072,836
96- 97 22,046,617 22,046,617 - 0-
TOTALS $ 135,657,184 $ 116,386,949 $ 19,270,235
Source: DOT Fiscal Division
Fund. Those funds can then be used for any project in the Transportation Improvement
Plan
Based on the language in the legislation, the Department’s policy is to deposit all federal
matching funds received, including those for Trust fund projects, into the Highway Fund.
These funds are in turn used for TIP- approved projects that are not Trust Fund projects.
While the legislation clearly allows this practice, the effect is that State funds are paying
for all Trust Fund projects even though some of these projects qualify for federal
matching. The Department’s position is that it was the General Assembly’s intent that
State funds pay for all Trust Fund projects and that any federal matching funds received
for Trust Fund projects are “ extra.”
From July 1989 through December 1997, the Board of Transportation has approved
$ 1.492 billion of federal funds ( Table 21) to be spent on intrastate and urban loop
projects. Through December 31, 1997, $ 1.247 billing had been transferred from the Trust
Fund to the Highway Fund for the State and federal portions of Trust Fund projects. We
could not readily determine from the Department’s accounting system how much of this
was for federal matching. If the federal match reimbursement for Trust Fund projects was
deposited back into the Trust Fund to be used on other Trust Fund projects, there would
be additional funds to complete Trust Fund projects in a more timely manner. ( See
discussion on project status beginning on page 23.)
RECOMMENDATION
The General Assembly and the Department should consider this issue
in detail. A decision should be made as to whether the construction
and completion schedule for Trust Fund projects should be given
priority over all other State road construction. The federal- matching
funds could be used to supplement the Trust Fund by replacing the
Trust Fund monies transferred to the Highway Fund for the federal
match share of Trust Fund work orders. Allowing the Trust Fund to
be reimbursed any federal matching funds, while benefiting the Trust
Fund, would require a major policy shift and could significantly
impact the State’s overall road construction program. However, this
change would provide additional funds to reduce the completion
timeframe for Trust Fund projects.
TRUST FUND ADMINISTRATIVE EXPENDITURES ARE NOT ACCOUNTED
FOR SEPARATELY.
GS § 136- 176 ( b) states that “. . . a sum, not to exceed four and one- half percent ( 4.5%)
of the amount of revenue . . . may be used each fiscal year by the Department for expenses
to administer the Trust Fund.” Administrative funds not expended during a given fiscal
year revert back to the Trust Fund for use on Trust Fund projects, as mandated by
legislation. Table 22 shows the amount of administrative funds for the Trust Fund since
FINDINGS AND RECOMMENDATIONS
43
Table 23
NUMBER OF POSITIONS FUNDED THROUGH THE
TRUST FUND BY YEAR
Fiscal
Year
Administrative
Positions
Work
Order
Positions
Cumulative
Totals
89- 90 167.6 503 670.6
90- 91 7 86 763.6
91- 92 38 256 1057.6
92- 93 9 16 1082.6
93- 94 3 43 112.6
94- 95 ( 4) 1 1125.6
95- 96 3 0 1128.6
96- 97 4 0 1132.6
97- 98 0.4 0 1133.0
TOTALS 228 905
Source: DOT Personnel Division
its inception. The Trust Fund was initiated to fund specific projects as discussed on page
8. All other Department operations are supported by the Highway Fund. The actual
administrative expenditures for Trust Fund projects are combined with those for Highway
Fund operations. Department management’s rationale for this accounting practice is that
most Trust Fund administrative expenditures also provide support for Highway Fund
operations. However, setting up each fund so that it would have a set of segregated
accounts for actual expenditures would allow for more accurate budgeting and accounting
for funds actually used to support each type of activity.
RECOMMENDATION
To more accurately reflect actual expenditures, the Department
should develop a chart of accounts which is dedicated strictly to Trust
Fund operations.
THE DEPARTMENT DOES NOT HAVE A FORMAL PLAN FOR TRUST FUND
POSITION REDUCTION.
The Highway Trust Fund, established in
1989, was initially planned to be a 13.5- year
undertaking. Although the Department will
not be able to meet the 13.5 year goal, the
Trust Fund will cease to exist when the
projects are completed and the revenues
supporting the Trust Fund are statutorily
repealed. ( General Statutes Article 14,
Chapter 136) In order to handle the
anticipated acceleration of the projects
specified in the Trust Fund legislation, the
Department has created a total of 1,133 new positions. Table 23 contains a breakdown of
the total number of positions funded through the Trust Fund by year. According to
Department management, these positions are used to support both Trust Fund and
Highway Fund projects. While “ work order” or field staff charge their time to specific
work orders showing fund type, no breakdown of time spent on each fund has been
performed for administrative positions. In our opinion, the positions supported by the
Trust Fund should be directly related to the workload generated by Trust Fund projects.
Therefore, as Trust Fund projects are completed, it should be possible to reassign and/ or
eliminate some of the positions now supported by the Trust Fund. At the time of the
audit, the Department did not have a formal plan for staff reduction. Without a formal
plan in place, efficient Trust Fund position management is impaired as projects are
completed. Approximately 27% of the road miles associated with Trust Fund projects
have been completed at December 31, 1997.
FINDINGS AND RECOMMENDATIONS
44
RECOMMENDATION
An analysis should be performed on all positions paid for by the Trust
Fund to determine the percentage of time associated with
responsibilities directly related to projects supported by this fund.
The time spent on Trust Fund operations should be billed to the
appropriate Trust Fund account. Department management should
also review job descriptions for accuracy after the position analysis is
complete. The Department should develop a Trust Fund position
reduction schedule to better plan adjustment of positions as projects
are completed. The Department should employ resources from its
Human Resources and Project Engineering Divisions in coordinating
the position reduction plan.
THE DEPARTMENT DOES NOT HAVE WRITTEN POLICIES AND
PROCEDURES FOR TRUST FUND EXPENDITURES.
GS § 136- 176( b) states that the Highway Trust Fund is to be used to administer, plan,
design, and construct projects of the interstate system and urban loops, supplement
appropriations for city streets, and provide for secondary road construction. The only
legislative guidelines for expenditures of the Highway Trust Fund are a limit of 4.5% of
the total revenue for use on administrative functions.
During the audit, we learned that Trust Fund administrative procedures, such as the
expenditure approval process, have not been formalized as written procedures. A written
manual was not deemed a priority due to the high experience level of personnel involved
in the administration of the Trust Fund. However, as the Department continues to
reorganize and retirements arise, employees placed in these positions who are unfamiliar
with the procedures are without a tool necessary for efficient and consistent operations.
Written procedures are critical to guide employees in the performance of their job duties.
The broad guidelines contained in the legislation, along with the absence of departmental
written administrative policies and procedures for the Highway Trust Fund, have provided
management with tremendous freedom in making decisions on expenditures to be
supported by this Fund.
RECOMMENDATION
The Department should modify its existing policies and procedures
manuals to include Trust Fund administration. The manual should
include step- by- step procedures required to perform the
administrative duties supported by this fund. A standard procedure
for updating and distribution should also be developed. Management
should require strict adherence to these policies and procedures.
These guidelines would provide management with an important tool
to assist in decision making.
APPENDICES
45
Appendix Description Page
A General Statutes: Article 14, Chapter 136 47
B Response from the Secretary of the Department of Transportation 55
APPENDICES
46
[ This page left blank intentionally.]
APPENDICES
Appendix A
47
ARTICLE 14. NORTH CAROLINA HIGHWAY TRUST FUND
Current through end of 1997 legislation
REPEAL OF ARTICLE
Laws 1989, c. 692, § 8.4, provides, in part:
" When contracts for all projects specified in Article 14 of Chapter 136 of the General Statutes have been
let and sufficient revenue has been accumulated to pay the contracts, the Secretary of Transportation shall
certify this occurrence by letter to the Speaker of the House of Representatives, the President Pro Tempore
of the Senate, and the Secretary of State. The changes below shall become effective on the first day of the
calendar quarter following the date the Secretary sends the letter, unless there is less than 30 days between
the date the letter is sent and the first day of the following quarter. In that circumstance, the changes shall
become effective on the first day of the second calendar quarter following the date the Secretary sends the
letter.
"( 1) Article 14 of Chapter 136 of the General Statutes is repealed."
§ 136- 175. Definitions
Current through end of 1997 legislation
The following definitions apply in this Article:
( 1) Intrastate System. The network of major, multilane arterial highways composed of those projects
listed in G. S. 136- 179, I- 240, I- 277, US- 29 from I- 85 to the Virginia line, and any other route added by
the Department of Transportation under G. S. 136- 178.
( 2) Transportation Improvement Program. The schedule of major transportation improvement projects
required by G. S. 143B- 350( f)( 4).
( 3) Trust Fund. The North Carolina Highway Trust Fund.
§ 136- 176. Creation, revenue sources, and purpose of North Carolina Highway Trust Fund
Current through end of 1997 legislation
( a) A special account, designated the North Carolina Highway Trust Fund, is created within the State
treasury. The Trust Fund consists of the following revenue:
( 1) Motor fuel, alternative fuel, and road tax revenue deposited in the Fund under G. S. 105- 449.125, 105-
449.134, and 105- 449.43, respectively.
( 2) Motor vehicle use tax deposited in the Fund under G. S. 105- 187.9.
( 3) Revenue from the certificate of title fee and other fees payable under G. S. 20- 85.
( 4) Revenue available from the retirement of refunding bonds issued to repay highway construction bonds
and deposited in the Fund under G. S. 136.183.
( 5) Interest and income earned by the Fund.
( b) Funds in the Trust Fund are annually appropriated to the Department of Transportation to be allocated
and used as provided in this subsection. A sum, not to exceed four and one- half percent ( 4.5%) of the
amount of revenue deposited in the Trust Fund under subdivisions ( a)( 1), ( 2), and ( 3) of this section, may
be used each fiscal year by the Department for expenses to administer the Trust Fund. The rest of the
funds in the Trust Fund shall be allocated and used as follows:
APPENDICES
Appendix A
48
( 1) Sixty- one and ninety- five hundredths percent ( 61.95%) to plan, design, and construct the projects of
the Intrastate System described in G. S. 136- 179 and to pay debt service on highway bonds and notes that
are issued under the State Highway Bond Act of 1996 and whose proceeds are applied to these projects.
( 2) Twenty- five and five hundredths percent ( 25.05%) to plan, design, and construct the urban loops
described in G. S. 136- 80 and to pay debt service on highway bonds and notes that are issued under the
State Highway Bond Act of 1996 and whose proceeds are applied to these urban loops.
( 3) Six and one- half percent ( 6.5%) to supplement the appropriation to cities for city streets under G. S.
136- 181.
( 4) Six and one- half percent ( 6.5%) for secondary road construction as provided in G. S. 136- 182 and to
pay debt service on highway bonds and notes that are issued under the State Highway Bond Act of 1996
and whose proceeds are applied to secondary road construction.
The Department must administer funds allocated under subdivisions ( 1), ( 2), and ( 4) of this subsection in
a manner that ensures that sufficient funds are available to make the debt service payments on bonds
issued under the State Highway Bond Act of 1996 as they become due.
( c) If funds are received under 23 U. S. C. Chapter 1, Federal- Aid Highways, for a project for which funds
in the Trust Fund may be used, the amount of federal funds received plus the amount of any funds from
the Highway Fund that were used to match the federal funds may be transferred by the Secretary of
Transportation from the Trust Fund to the Highway Fund and used for projects in the Transportation
Improvement Program.
( d) A contract may be let for projects funded from the Trust Fund in anticipation of revenues pursuant to
the cash- flow provisions of G. S. 143- 28.1 only for the two bienniums following the year in which the
contract is let.
Amended by Laws 1995, c. 390, § 27, eff. Jan. 1, 1996; Laws 1995, c. 590, § 6, eff. Nov. 26, 1996; Laws
1996, 2 Ex. Sess., c. 18, § 19.4( a), eff. July 1, 1996.
HISTORICAL NOTES
HISTORICAL AND STATUTORY NOTES
Laws 1995, c. 590, § § 9, 17, provide:
" Sec. 9. Election. The question of the issuance of the bonds authorized by this act shall be submitted to
the qualified voters of the State at the general election in November 1996. Any other primary, election, or
referendum validly called or scheduled by law at the time the election on the bond question provided for in
this section is held may be held as called or scheduled. Notice of the election shall be given in the manner
and at the times required by G. S. 163- 33( 8). The election and the registration of voters for the election
shall be held under and in accordance with the general laws of the State. Absentee ballots shall be
authorized in the election.
" The State Board of Elections shall reimburse the counties of the State for all necessary expenses incurred
in holding the election which are in addition to those which would have otherwise been incurred, these
expenses to be paid out of the Contingency and Emergency Fund or other funds available to the State
Board of Elections.
" Ballots, voting systems authorized by Article 14 of Chapter 163 of the General Statutes, or both may be
used in accordance with rules prescribed by the State Board of Elections. The bond question to be used in
the ballots or voting systems shall be in substantially the following form:
"[ ] FOR [ ] AGAINST
APPENDICES
Appendix A
49
" The issuance of nine hundred fifty million dollars ($ 950,000,000) State of North Carolina Highway
Bonds constituting general obligation bonds of the State secured by a pledge of the faith and credit and
taxing power of the State for the purpose of providing funds, with any other available funds, through the
application of not in excess of five hundred million dollars ($ 500,000,000) of the bonds to pay the capital
costs of urban loops, the application of not in excess of three hundred million dollars ($ 300,000,000) of
the bonds to pay the capital costs of Intrastate System projects, and the application of not in excess of one
hundred fifty million dollars ($ 150,000,000) of the bonds to pay the capital costs of projects constituting a
part of the State secondary highway system resulting in the paving of unpaved roads.
" If a majority of those voting on the bond question vote in favor of the issuance of the bonds, the bonds
may be issued as provided in this act. If a majority of those voting on the bond question vote against the
issuance of the bonds, the bonds shall not be issued.
" The results of the election shall be canvassed and declared as provided by law for the holding of elections
for State officers; the results of the election shall be certified by the State Board of Elections to the
Secretary of State, in the manner and at the time provided by the general election laws of the State."
" Sec. 17. Effective date. This act is effective upon ratification, except that Sections 6, 7, 15, and 16 shall
become effective upon the certification of a favorable vote on the bonds by the State Board of Elections to
the Secretary of State as provided in Section 9 of this act."
Laws 1995, c. 590, was ratified June 20, 1996.
The bond question proposed by Laws 1995, c. 590, § 9, was approved at the 1996 general election, and
was certified Nov. 26, 1996.
§ 136- 177. Limitation on funds obligated from Trust Fund
Current through end of 1997 legislation
In a fiscal year, the Department of Transportation may not obligate more Trust Fund revenue, other than
revenue allocated for city streets under G. S. 136- 176( b)( 3) or secondary roads under G. S. 136- 176( b)( 4)
and G. S. 20- 85( b), to construct or improve highways than the amount indicated in the following table:
Fiscal Year Maximum Expenditure
1989- 90 $ 200,000,000
1990- 91 250,000,000
1991- 92 300,000,000
1992- 93 400,000,000
1993- 94 500,000,000
1994- 95 and following years Unlimited
The amount of revenue credited to the Trust Fund in a fiscal year under G. S. 136- 176( a) that exceeds the
maximum allowable expenditure set in the table above may be used only for preliminary planning and
design and the acquisition of rights- of- way for scheduled highways and highway improvements to be
funded from the Trust Fund.
§ 136- 177.1. Requirement to use federal funds for Intrastate System projects and urban loops
Current through end of 1997 legislation
For fiscal years 1996- 97 through 2010- 11, the Department of Transportation must use ten million dollars
APPENDICES
Appendix A
50
($ 10,000,000) of the funds it receives each year under 23 U. S. C. Chapter 1, Federal- Aid Highways, to
construct the Intrastate System projects described in G. S. 136- 179. For fiscal years 1996- 97 through
2011- 12, the Department of Transportation must use ten million dollars ($ 10,000,000) of the funds it
receives each year under 23 U. S. C. Chapter 1, Federal- Aid Highways, to construct the urban loops
described in G. S. 136- 180. G. S. 136- 176( c) does not apply to federal funds required to be used under this
section for Intrastate System projects or urban loops, nor does it apply to any funds from the Highway
Fund that were used to match these federal funds.
Added by Laws 1995, c. 590, § 15, eff. Nov. 26, 1996.
§ 136- 178. Purpose of Intrastate System
Current through end of 1997 legislation
The Intrastate System is established to provide high- speed, safe travel service throughout the State. It
connects major population centers both inside and outside the State and provides safe, convenient,
through- travel for motorists. It is designed to support statewide growth and development objectives and to
connect to major highways of adjoining states. All segments of the routes in the Intrastate System shall
have at least four travel lanes and, when warranted, shall have vertical separation or interchanges at
crossings, more than four travel lanes, or bypasses. Access to a route in the Intrastate System is
determined by travel service and economic considerations.
The Department of Transportation may add a route to the Intrastate System if the route is a multilane
route and has been designed and built to meet the construction criteria of the Intrastate System projects.
No funds may be expended from the Trust Fund on routes added by the Department.
§ 136- 179. Projects of Intrastate System funded from Trust Fund
Current through end of 1997 legislation
Funds allocated from the Trust Fund for the Intrastate System may be used only for the following projects
of the Intrastate System:
Route Improvements Affected Counties
I- 40 Widening Buncombe, Haywood, Guilford,
Wake, Durham
I- 77 Widening Mecklenburg
I- 85 Widening Durham, Orange, Alamance,
Guilford, Cabarrus,
Mecklenburg, Gaston
I- 95 Widening Halifax
US- 1 Complete 4- laning from Henderson to South
Carolina Line ( including 6- laning of Raleigh
Beltline)
Vance, Franklin, Wake,
Chatham, Lee, Moore, Richmond
US- 13 Connector from I- 95 to NC- 87 Cumberland
US- 13 Complete 4- laning from Virginia Line to US-
17
Gates, Hertford, Bertie
US- 17 Complete 4- laning from Virginia Line to
South Carolina Line ( including Washington,
New Bern, and Jacksonville Bypasses)
Camden, Pasquotank,
Perquimans, Chowan, Bertie,
Martin, Beaufort, Craven, Jones,
Onslow, Pender, New Hanover,
Brunswick
US- 19/ US- 19E Complete 4- laning from US- 23 to NC 194 in Madison, Yancey, Mitchell,
APPENDICES
Appendix A
51
Ingalls Avery
US- 19 Complete 4- laning Cherokee, Macon, Swain
US- 23 Complete 4- laning and upgrading existing 4-
lanes from Tennessee Line to I- 240
Madison, Buncombe
US- 23- 441 Complete 4- laning from US- 19/ US- 74 to
Georgia Line
Macon
US- 52 Complete 4- laning from I- 77 to Lexington
( including new I- 77 Connector)
Surry, Davidson
US- 64 Complete 4- laning from Raleigh to Coast
( including freeway construction from I- 95 to
US- 17)
Edgecombe, Pitt, Martin,
Washington, Tyrrell, Dare
US- 64 Complete 4- laning from Lexington to Raleigh Davidson, Randolph, Chatham,
Wake
US- 70 Complete 4- laning from Raleigh to Morehead
City ( including Clayton, Goldsboro, Kinston,
Smithfield- Selma, and Havelock Bypasses
predominately freeways on predominately new
locations)
Wake, Johnston, Wayne, Lenoir,
Craven
US- 74 Complete 4- laning from Charlotte to US- 17
( including multilaning of Independence Blvd.
in Charlotte, and Bypasses of Monroe,
Rockingham, and Hamlet)
Mecklenburg, Union, Richmond,
Robeson, Columbus
US- 74 Complete 4- laning from I- 26 to I- 85 Polk, Rutherford
US- 158 Complete 4- laning from Winston- Salem to
Whalebone
Forsyth, Guilford, Rockingham,
Caswell, Person, Granville,
Vance, Warren, Halifax,
Northampton, Gates, Hertford,
Pasquotank, Camden, Currituck,
Dare
New bridge over Currituck Sound Currituck
US- 221 Complete 4- laning from Linville to South
Carolina
Avery, McDowell, Rutherford
US- 220 Complete 4- laning from I- 40 to US- 1 Guilford, Randolph,
Montgomery, Richmond
US- 220/ NC- 68 Complete 4- laning from Virginia Line to I- 40 Rockingham, Guilford
US- 264 Complete 4- laning from US- 64 to Washington
( including Wilson and Greenville Bypasses)
( including freeway construction from I- 95 to
Greenville)
Wilson, Greene, Pitt
US- 321 Complete 4- laning from Boone to South
Carolina Line
Caldwell, Catawba, Lincoln,
Gaston
US- 421 Complete 4- laning from Tennessee Line to I-
40
Watauga, Wilkes, Yadkin
US- 421 Complete 4- laning from Greensboro to
Sanford ( including Bypass of Sanford)
Chatham, Lee
NC- 24 Complete 4- laning from Charlotte to
Morehead City
Mecklenburg, Cabarrus, Stanly,
Montgomery, Moore, Harnett,
Cumberland, Sampson, Duplin,
Onslow, Carteret
APPENDICES
Appendix A
52
NC- 87 Complete 4- laning

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PERFORMANCE AUDIT
DEPARTMENT OF TRANSPORTATION
NORTH CAROLINA HIGHWAY TRUST FUND
DECEMBER 1998
AUDITOR'S TRANSMITTAL
December 14, 1998
The Honorable James B. Hunt, Jr., Governor
Secretary E. Norris Tolson, Department of Transportation
Members of the Board of Transportation
Members of the North Carolina General Assembly
Ladies and Gentlemen:
We are pleased to submit this performance audit of the Department of Transportation,
North Carolina Highway Trust Fund. The objectives of the audit were to determine the
actual revenues received, compare to original estimates, and estimate anticipated revenues
for the duration of the Trust Fund projects; to identify the Trust Fund projects as
contained in legislation, determine the status of each project, compare original costs and
time estimates to current estimates, and estimate completion dates based on data available;
to examine progress on completing paving of secondary roads; and to examine Trust Fund
procedures for expenditure and transfer of funds.
This report consists of an executive summary, program overview, and operational findings
and recommendations. The Secretary of Transportation has reviewed a draft copy of this
report. His written comments are included as Appendix B.
We wish to express our appreciation to Secretary Tolson and his staff for the courtesy,
cooperation, and assistance provided us during this effort.
Respectfully submitted,
Ralph Campbell, Jr.
State Auditor
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY ..................................................................................................................... 1
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY .................................................................. 3
BACKGROUND INFORMATION........................................................................................................ 5
FINDINGS AND RECOMMENDATIONS.......................................................................................... 17
Revenue Projections ........................................................................................................................... 17
Project Status ............................................................................................................................... ..... 23
Secondary Roads ............................................................................................................................... 32
Trust Fund Expenditures and Transfers.............................................................................................. 38
TABLES:
1 Original Highway Trust Fund Revenue Projections .................................................................... 7
2 Intrastate System Routes Identified by Statute ............................................................................ 8
3 Urban Loops Identified by Statute .............................................................................................. 8
4 Trust Fund Revenues from Motor Fuels Tax .............................................................................. 9
5 Trust Fund Revenues from Highway Use Tax ............................................................................ 9
6 Fees Related to Motor Vehicle Titles........................................................................................ 10
7 Trust Fund Revenues from Title Fees....................................................................................... 10
8 Highway Trust Fund Revenue from Retirement of Refunding Bonds........................................ 10
9 Interest Income Earned by The Highway Trust Fund................................................................ 11
10 Highway Trust Fund Expenditures for Secondary Roads and Aid to Municipalities
FY89- 90 through FY93- 94 ................................................................................................... 13
11 1989 Data Supporting Calculation of Highway Trust Fund Equity Distribution........................ 15
12 Highway Trust Fund Equity Distribution by Region: FY89- 90 through FY96- 97 .................... 16
13 Estimated Trust Fund Cost and Mileage as of 12- 31- 97 ........................................................... 19
14 Highway Trust Fund: Projected Revenues and Distributions: FY97- 98 through FY2012- 13 ... 21
15 Highway Trust Fund Project Status as of December 1997......................................................... 24
16 Trust Fund Eligible Projects for Which No Trust Fund Monies Have Been Expended .............. 25
17 Highway Trust Fund Revenues Minus Trust Fund Obligations
FY89- 90 through FY93- 94 ................................................................................................... 29
18 Schedule of Unpaved Secondary Roads as of December 1997................................................... 34
19 Summary of Secondary Roads With Identified Unavailable Right of Way ................................ 36
20 Actual Transfers of Expenditures from the Highway Trust Fund for Construction Projects....... 39
21 Highway Trust Fund Authorized Expenditures by Route: FY89- 90 through FY96- 97 .............. 40
22 Trust Fund Administrative Funds: FY89- 90 through FY96- 97................................................. 42
23 Number of Positions Funded by the Trust Fund: FY89- 90 through FY96- 97 ............................ 42
EXHIBITS:
1 Actual Gross Revenues vs. Projected Gross Revenues............................................................... 11
2 Trust Fund Construction Expenditures for Intrastate Routes and Urban Loops ......................... 13
3 NC Highway Trust Fund Equity Formula Regions ................................................................... 14
4 Gallons of Motor Fuels Sold: FY89- 90 through FY97- 98........................................................ 17
5 Number of Vehicles Titled and Registered: 1989 through 1997............................................... 18
6 Highway Trust Fund: Difference in Actual vs. Projected Revenues
FY89- 90 through FY96- 97 ................................................................................................... 18
7 Highway Trust Fund: Difference in Actual vs. Revised Projected Revenues
FY91- 92 through FY96- 97 ........................................................................................................ 19
8 Highway Trust Fund Projects and Costs as Percent of Total TIP Projects and Costs ................. 23
9 North Carolina Intrastate System Project Status ( includes Loops)............................................. 27
10 Highway Trust Fund Obligations vs. Limitations: FY89- 90 through FY93- 94......................... 29
11 Changes in Highway Trust Fund Costs Projections .................................................................. 30
12 Highway Trust Fund Construction Costs Per Mile.................................................................... 30
13 Miles of Unpaved Secondary Roads by Fiscal Year .................................................................. 33
14 Miles of Secondary Roads Paved vs. Department Goals............................................................ 32
15 Priority System for Paving of Secondary Roads ........................................................................ 38
TABLE OF CONTENTS
APPENDICES:
A General Statutes: Article 14, Chapter 136................................................................................. 47
B Auditee Response ...................................................................................................................... 55
DISTRIBUTION OF AUDIT REPORT............................................................................................... 61
EXECUTIVE SUMMARY
1
We have conducted a performance audit of the North Carolina Highway Trust Fund
administered by the North Carolina Department of Transportation ( Department). This
audit was undertaken at the request of the legislative leadership. The audit examined
original assumptions and projections, and evaluated current assumptions and projections,
as well as the Department’s compliance with statutory requirements for the Trust Fund.
The North Carolina Highway Trust Fund was established by legislation in 1989 for the
purpose of improving identified “ primary transportation corridors” within the State
( 1,844.2 miles) and completing urban loops around seven major metropolitan areas ( 205.4
miles). Additionally, the Trust Fund was to provide for the paving of all state- maintained
dirt roads and for additional assistance to municipalities for city streets. Funds were to
come from motor fuel, alternative fuel, and road tax revenues; motor vehicle use tax;
revenue from certificate of title fees; revenue from retirement of refunding bonds; and
interest income earned by the Fund. Originally estimated to take 13.5 years and $ 8.2
billion to complete, the Department now estimates that the Trust Fund will require 23
years and $ 11.6 billion to complete. As of December 31, 1997, Department records
showed that 27% of the identified miles had been completed, requiring 24% of the current
estimated costs.
The draft report was reviewed by the Secretary of Transportation. His response is
included as Appendix B, page 55.
FINDINGS
Page
REVENUE PROJECTIONS ................................................................................................................ 17
DEPARTMENT OFFICIALS MADE OVERLY OPTIMISTIC INITIAL TRUST
FUND REVENUE FORECASTS. .................................................................................................... 17
PROJECTED TRUST FUND REVENUES MAY NOT BE SUFFICIENT TO
MEET THE NEEDS OF THE PROGRAM....................................................................................... 19
PROJECT STATUS......................................................................................................................... ... 23
THE CURRENT CONSTRUCTION SCHEDULE WILL NOT MEET THE
REVISED COMPLETION DATE OF 2013 FOR TRUST FUND PROJECTS.................................. 25
THE DEPARTMENT WAS NOT ABLE TO SIGNIFICANTLY ACCELERATE
TRUST FUND CONSTRUCTION AFTER THE EXPIRATION OF THE INITIAL
LIMITATIONS ON CONSTRUCTION EXPENDITURES. ............................................................. 26
ESTIMATED COSTS FOR TRUST FUND PROJECTS HAVE INCREASED 53%
SINCE 1989........................................................................................................................... ......... 30
EXECUTIVE SUMMARY
2
FINDINGS ( concluded)
Page
SECONDARY ROADS ........................................................................................................................ 32
THE ANNUAL PAVING GOALS FOR SECONDARY ROADS WILL NOT
MEET THE STATUTORY TIME REQUIREMENTS...................................................................... 33
UNDER CURRENT BOARD POLICY, THE DEPARTMENT WILL NOT BE
ABLE TO PAVE ALL UNPAVED SECONDARY ROADS WITH 50+ VEHICLE
TRAFFIC........................................................................................................................ ................ 35
DEPARTMENT PROCEDURES FOR PRIORITIZING THE PAVING OF
SECONDARY ROADS HAVE NOT ASSURED COMPLIANCE WITH
STATUTES. ............................................................................................................................... .... 37
TRUST FUND EXPENDITURES AND TRANSFERS ...................................................................... 38
FEDERAL MATCHING FUNDS RECEIVED FOR TRUST FUND PROJECTS
ARE DEPOSITED INTO THE HIGHWAY FUND ACCOUNT....................................................... 40
TRUST FUND ADMINISTRATIVE EXPENDITURES ARE NOT ACCOUNTED
FOR SEPARATELY..................................................................................................................... .. 41
THE DEPARTMENT DOES NOT HAVE A FORMAL PLAN FOR TRUST FUND
POSITION REDUCTION. ............................................................................................................... 42
THE DEPARTMENT DOES NOT HAVE WRITTEN POLICIES AND
PROCEDURES FOR TRUST FUND EXPENDITURES. ................................................................. 43
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
3
North Carolina General Statute § 147- 64 empowers the State Auditor with authority to
conduct performance audits of any State agency or program. Performance audits are
reviews of activities and operations to determine whether resources are being used
economically, efficiently, and effectively. Performance audits may also include financial
reviews.
This performance audit of the North Carolina Highway Trust Fund ( Trust Fund), within
the Department of Transportation ( Department), was undertaken at the request of the
legislative leadership. The State Auditor was asked to separately review the Trust Fund
activities. Specific objectives were to:
· Determine the actual revenues received, compare to original estimates, and estimate
anticipated revenues for the duration of the Trust Fund projects;
· Identify the Trust Fund projects as contained in legislation, determine status of each project,
compare original cost and time estimates to current estimates, and estimate completion dates
based on data available;
· Examine progress on completing paving of secondary roads; and
· Examine Trust Fund procedures for expenditure and transfer of funds, including the use of
administrative funds and number and type of positions funded by the Trust Fund.
The scope of the audit encompassed selected aspects of the operation of the North
Carolina Highway Trust Fund.
During the period February 9, 1998 through August 10, 1998, we conducted the on- site
fieldwork for the audit of the Trust Fund. To achieve the audit objectives, we employed
various auditing techniques which adhere to the generally accepted standards as
promulgated in Government Auditing Standards issued by the Comptroller General of the
United States. These techniques included:
· Review of existing General Statutes and North Carolina Administrative Code as they relate
to the Trust Fund;
· Review of Department policies and procedures for the administration of the Trust Fund;
· In- depth interviews with Department staff, as well as interviews with persons external to the
Department;
· Review of existing studies and reports on the operations of the Trust Fund;
· Examination of position descriptions and payroll data;
· Identification of fund transfers from the Trust Fund to the Highway Fund; and
· Analysis of expenditures from the Trust Fund administrative funds.
This report contains the results of the audit as well as specific recommendations aimed at
improving the operations of the Trust Fund in terms of economy, efficiency, and
effectiveness. Because of the test nature and other inherent limitations of an audit,
together with the limitations of any system of internal and management controls, this audit
would not necessarily disclose all weaknesses in the system or lack of compliance. Also,
projection of any of the results contained in this report to future periods is subject to the
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
4
risk that procedures may become inadequate due to changes in conditions and/ or
personnel, or that the effectiveness of the design and operation of the policies and
procedures may deteriorate.
BACKGROUND INFORMATION
5
In 1989 State leaders decided that North Carolina, on an economic threshold, needed to
complete the “ primary transportation corridors” in the State to take full advantage of an
expanding economy and to attract new industry. Leaders felt the existing Transportation
Improvement Program ( TIP) was slow in addressing the perceived construction needs.
Department of Transportation ( Department) management indicated to legislators that the
TIP, a planning device, should not be considered an accurate schedule for initiating or
completing a highway construction project. As a result, a legislative Joint Transportation
Oversight Committee ( Committee) was formed to address these concerns.
The Department was directed to assist the Committee and its staff in determining the
projected requirements for completing the “ primary transportation corridors.” The
concept called for completion of all interstate highways within North Carolina and the
multi- laning of other cross- state highways. The Committee also determined that urban
loops were needed around seven of the major metropolitan areas to assist in the flow of
traffic and prevent “ bottlenecking” during rush hours. Legislation was drafted outlining
the identified needs. ( Many of the corridor and urban loop projects identified by the
Committee were already in the TIP at various stages of completion.) Stipulations were
added to the legislation to ensure that most areas of the State, including rural undeveloped
areas, received some financial benefit from the legislation. To this end, the legislation
called for the paving of all state- maintained dirt roads and for providing additional
assistance to municipalities for city streets.
Department staff gave its “ best estimates” for construction costs based on average mileage
costs within the major geographic sectors of the State ( mountains, piedmont, and coast).
However, cost estimates did not include any consideration of annual economic or
construction cost inflation or preliminary costs such as planning, engineering, and
environmental impact studies. These types of additional costs were not included due to
the time constraints for providing information to the Committee. Therefore, the initial
costs given to the Committee were significantly underestimated.
The initial estimate of time to complete the Trust Fund construction projects was 13.5
years, beginning in fiscal year 1989 and ending in fiscal year 2003. However, due to the
combination of many delaying factors1, Department management now estimates a project
completion time of fiscal year 2013. This means the program will be 23 years duration
instead of the original 13.5. ( See discussion beginning on page 25 relative to time
required to complete all projects.)
Statutory Authority
Article 14, Chapter 136 of the General Statutes contains the legislation establishing the
Trust Fund. ( See Appendix A, page 47) This article also provides for repeal of the
legislation when contracts for all Trust Fund projects have been let and sufficient revenue
has been accumulated to pay the contracts.
1 Delaying factors are discussed in detail in the “ project status” section of the report.
BACKGROUND INFORMATION
6
Creation of the North Carolina Highway Trust Fund:
GS § 136- 176 created a special account within the State Treasury called the North
Carolina Highway Trust Fund. Funds are credited to this account from the following
revenue sources:
1. Motor fuel, alternative fuel, and road tax revenue deposited in the Fund under GS § 105- 449.
2. Motor vehicle use tax deposited in the Fund under GS § 105- 187.9.
3. Vehicle certificate of title fees and other fees payable under GS § 20- 85.
4. Revenue from the retirement of refunding bonds issued to repay highway construction bonds and
deposited in the Fund under GS § 136.83.
5. Interest income earned by the Fund.
Prior to the Trust Fund legislation, the taxes noted above had been received into the
State’s General Fund. Therefore, a statutory provision was necessary to continue some
level of taxation support to the General Fund. GS § 105- 187.9 provides for the State
Treasurer to annually transfer $ 170 million from the Trust Fund to the General Fund on
either a quarterly or fiscal year basis depending on availability of funds.
GS § 136- 176 also provides the Department of Transportation with funding to administer
the Trust Fund. The administrative funding is set at an annual appropriation not to exceed
4.5% 2 of the taxes and fees ( items 1,2 and 3 above). Any administrative funds not
expended in a fiscal year revert back to the Trust Fund for reallocation.
The legislation places the following allocation stipulations on the Trust Fund:
· Sixty- one and ninety- five hundredths percent ( 61.95%) to plan, design, and construct the projects
of the Intrastate System described in GS § 136- 179.
· Twenty- five and five hundredths percent ( 25.05%) to plan, design, and construct the urban loops
described in GS § 136- 180.
· Six and one- half percent ( 6.5%) to supplement the appropriation to cities for city streets under
GS § 136- 181.
· Six and one- half percent ( 6.5%) for secondary road construction as provided in GS § 136- 182.
Table 1, page 7, shows the original revenue projections for the Trust Fund as found in the
1989 Transportation Improvement Program ( TIP).
2 The administrative percentage was originally set at 5% but was adjusted to 4.5% in 1990.
BACKGROUND INFORMATION
7
Table 1
DEPARTMENT OF TRANSPORTATION
ORIGINAL HIGHWAY TRUST FUND REVENUE PROJECTIONS
($ in millions)
Fiscal Years 13.5
YEAR
TOTALS
1989- 90 1990- 91 1991- 92 1992- 93 1993- 94 1994- 95 1995- 96 1996- 97 1997- 98 1998- 99 1999- 00 2000- 01 2001- 02 2002- 03
FUNDING SOURCES
25% GAS TAX REVENUES $ 180.4 $ 221.9 $ 227.4 $ 233.1 $ 238.9 $ 244.9 $ 251.0 $ 257.3 $ 263.7 $ 270.3 $ 277.1 $ 284.0 $ 291.1 $ 298.4 $ 3539.7
3% USE TAX 294.8 404.8 416.9 429.5 451.9 465.5 479.4 493.8 508.6 523.9 539.6 555.8 572.5 589.6 6726.5
TITLE FEE INCREASE $ 30 52.5 61.8 63.7 65.6 67.5 69.6 71.6 73.8 76.0 78.3 80.6 83.1 85.6 88.1 1017.7
MISC. FEES $ 10 15.6 18.3 18.9 19.4 20.0 20.6 21.3 21.9 22.6 23.2 23.9 24.6 25.4 26.1 301.9
INTEREST ON TRUST
FUND
8.4 11.2 17.8 18.4 19.5 20.5 21.3 22.7 23.7 24.4 25.3 26.1 26.9 27.9 294.2
DEBT SERVICE
AVAILABILITY
0 0 0 0 0 9.6 12.1 32.2 38.0 38.0 38.0 38.0 38.0 38.0 281.9
TOTAL FUNDING
SOURCES
551.7 718.0 744.7 766.0 797.8 830.7 856.7 901.7 932.6 958.1 984.5 1011.6 1039.5 1068.1 12161.9
LESS GENERAL FUND
TRANSFER
- 279.4* - 356.0* - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 170.0 - 2675.4
TOTAL TRUST FUND
REVENUES
$ 272.3 $ 362.0 $ 574.7 $ 596.1 $ 627.8 $ 660.7 $ 686.7 $ 731.7 $ 762.5 $ 788.1 $ 814.4 $ 841.6 $ 869.5 $ 898.1 $ 9486.5
* Note: Section 4.3 of the 1989 House Bill 399 authorized these transfers.
SOURCE: 1989 TRANSPORTATION IMPROVEMENT PROGRAM, Planks, Pavements, and Progress
BACKGROUND INFORMATION
8
Table 2
INTRASTATE SYSTEM ROUTES
IDENTIFIED BY STATUTE
Intrastate Route Original
Estimated
Miles
I- 40 21.4
I- 77 8.9
I- 85 79.5
I- 95 0.0
US 1 100.1
US 13 45.9
US 17 200.0
US 19 AND 19( E) 67.1
US 23 30.0
US 23- 441 11.4
US 52 22.6
US 64- 264 120.0
US 64 74.9
US 70 64.9
US 74 AND 74 ( A) 98.6
US 158 245.9
BRIDGE ( US 158) 9.9
US 221 57.6
US 220 30.1
US 220/ NC 68 30.7
US 264 30.3
US 321 45.5
US 421 AND 421 ( A) 108.5
US 24- 27 195.2
NC 87 85.1
NC 105 30.0
NC 168 18.5
NC 194* 11.6
TOTAL 1844.2
* The NC 194 project initially identified in
legislation was later merged with the US
221 project by the Department.
Source: NC General Statutes and 1989
Transportation Improvement
Program
Table 3
URBAN LOOPS IDENTIFIED BY
STATUTE
Loop Original
Estimated
Miles
Asheville 0.0
Charlotte 63.4
Durham 16.4
Greensboro 41.6
Raleigh 39.3
Wilmington Bypass 20.2
Winston- Salem 24.5
TOTAL 205.4
Source: NC General Statutes and 1989
Transportation Improvement
Program
Intrastate System Trust Fund Projects:
GS § 136- 178 states that the Intrastate System “ trans-portation
corridors” are established to provide high-speed,
safe travel service throughout the State, con-nect
major population centers both inside and outside
the State, and provide safe, convenient, through- travel
for motorists. The Intrastate System is designed to
support statewide growth and development objectives
and to connect to major highways of adjoining states.
All segments of the routes in the Intrastate System
must have at least four travel lanes or bypasses.
GS § 136- 179 designates the specific intrastate high-way
routes ( see Table 2), the specific counties
wherein construction is required, and contains a
description of the construction requirements to com-plete
the routes to specifications. There are 145 intra-state
projects on 28 routes identified under this statute
through December 1997.
Urban Loop Trust Fund Projects:
GS § 136- 180 designates the seven specific urban
loops ( see Table 3), the county( s) in which the loops
are located, and contains a general description of
where the loops are to be constructed. Currently,
there are 16 projects identified for the loops.
Revenues:
The 1989 General Assembly created the North Caro-lina
Highway Trust Fund, designated the sources of
revenue for the Fund, and specified the purposes for
which Trust Fund revenue may be used. The High-way
Trust Fund originally consisted of motor fuel
tax, highway use tax, and title fees.
BACKGROUND INFORMATION
9
Table 4
TRUST FUND REVENUES
( NET) FROM MOTOR FUELS
TAX
FY Amount Collected
1990 $ 184,886,274
1991 206,551,360
1992 213,363,345
1993 212,444,033
1994 222,011,480
1995 223,032,201
1996 232,662,410
1997 243,731,232
TOTAL $ 1,738,682,335
Source: DOT Financial Records
Motor Fuel Tax
Table 5
TRUST FUND REVENUES
( NET) FROM HIGHWAY
USE TAX
FY Amount Collected
1990 $ 164,693,276
1991 231,358,005
1992 242,339,363
1993 273,251,863
1994 330,473,708
1995 364,648,614
1996 397,273,096
1997 407,577,335
TOTAL $ 2,411,615,260
Source: DOT Financial Records
Twenty- five percent of the excise
taxes collected on motor fuels and
25% of the road tax levied on motor
carriers for the privilege of using the roads in this State are
designated for the Highway Trust Fund. These taxes were
increased effective August 1, 1989, from 15.7 cents a
gallon to 20.9 cents a gallon, an increase of 5.2 cents a
gallon. Table 4 shows the net revenues collected from the
motor fuels tax for the first 8 years of the Trust Fund.
The Highway Use Tax, effective
October 1, 1989, is levied when a
certificate of title for a motor vehicle is issued. Certain
motor vehicles that will be rented or leased are not taxed.
This titling tax replaced the 2%, $ 300 maximum sales tax on
motor vehicles. The use tax, 3% of the retail value of the
vehicle, cannot be less than $ 40.00, could not exceed $ 1,000
until July 1, 1993, and cannot exceed $ 1,500 after that date.
Those who lease or rent motor vehicles are given an option
of paying the use tax when they purchase a vehicle for lease
or rent, or paying a tax on the gross lease or rental receipts3
subsequently received when the vehicle is leased or rented.
The maximum use tax applies to lease or rental receipts, but
the maximum is computed anew on each lease or rental of
the vehicle to a different person. Table 5 summarizes the net
revenues collected from the Highway Use Tax.
Revenue from the fee increases shown in Table 6, page 10, related to
titles for motor vehicles are also deposited in the Highway Trust Fund.
These fees are in addition to the highway use tax imposed at the time a
certificate of title is issued. The fee increases were effective August 15, 1989. Table 7,
page 10 summarizes net title fee revenues.
3 The optional tax on gross receipts is 8% on leases or rentals to the same person for no more than 90
days, and it is 8% for the first 90 days of a lease or rental to the same person for more than 90 days and
3% for the period in excess of 90 days. In 1991, changes in legislation provided that the 3% tax applied to
leases greater than 365 days and the 8% tax applied to leases less than 365 days. Revenue from the
optional tax is placed in the Trust Fund if it is at the 3% rate and the General Fund if it is at the 8% rate.
Highway Use Tax
Title Fees
BACKGROUND INFORMATION
10
Table 8
HIGHWAY TRUST FUND REVENUE
FROM RETIREMENT OF REFUNDING
BONDS
Fiscal Year Yearly Amount
Credit to Trust
Fund
1994- 95 $ 9,600,000
1995- 96 12,100,000
1996- 97 32,300,000
1997- 98 and each
subsequent year until
the Trust Fund ends
38,000,000
Source: DOT Financial Records
Table 6
FEES RELATED TO MOTOR VEHICLE TITLES
Type Fee Prior
to 8/ 15/ 89
Fee After
8/ 15/ 89
Certificate of Title $ 5.00 $ 35.00
Duplicate or Corrected Title $ 7.00 $ 10.00
Repossessor of Title $ 5.00 $ 10.00
Transfer of Registration $ 4.00 $ 10.00
Replacement of Registration
Plates
$ 9.00 $ 10.00
Duplicate of Registration
Certificate
$ 3.00 $ 10.00
Recording Supplementary Lien $ 3.00 $ 10.00
Title Transferred to a Dealer
when no tax is due
$ 0.00 $ 10.00
Instant Title N/ A $ 50.00
Source: NC General Statutes 20- 85
Table 7
TRUST FUND REVENUES ( NET) FROM TITLE FEES
Fiscal
Year
Certificate of
Title Fee
Miscellaneous
Registration
Fee
Lien
Recording
Fees
Total
Fees
1990 $ 43,694,744 $ 5,770,320 $ 2,032,309 $ 51,497,373
1991 46,973,156 6,065,620 2,338,557 55,377,333
1992 48,736,498 7,383,069 2,399,322 58,518,889
1993 51,579,599 7,863,727 2,717,483 62,160,809
1994 56,908,904 8,548,719 2,682,036 68,139,659
1995 65,028,791 9,479,502 2,567,991 77,076,284
1996 64,201,381 10,217,217 2,607,998 77,026,596
1997 73,029,553 10,244,618 2,443,177 85,717,348
TOTAL $ 450,152,626 $ 65,572,792 $ 19,788,873 $ 535,514,291
Source: DOT Financial Records
Beginning
in fiscal year 1994- 95, the Trust Fund received reve-nue
from the retirement of refunding4 bonds issued to
repay highway construction bonds. Legislation directs
the State Treasurer to credit to the Highway Trust
Fund one- fourth of a set amount for each year within
10 days after the end of each calendar quarter. Table
8 shows the amount credited to the Trust Fund for
fiscal years 1994- 95 through 1997- 98.
4 “ Refunding bonds” are bonds issued at a lower interest rate to replace higher interest rate bonds.
Transfers from the Highway Fund
BACKGROUND INFORMATION
11
Table 9
INTEREST INCOME EARNED BY
THE HIGHWAY TRUST FUND
Fiscal Year Interest Income
1990 $ 7,425,858
1991 20,843,501
1992 23,105,860
1993 24,116,084
1994 22,468,967
1995 28,856,582
1996 32,670,600
1997 35,719,382
TOTAL $ 195,206,834
Source: DOT Financial Records
The legislation creating the
Trust Fund also set up a
special account, designated the North Carolina High-way
Trust Fund, within the State treasury in 1989.
Interest income earned on the previously- described
revenues deposited with the State treasury is
maintained in the Highway Trust Fund. Table 9 shows
the amount of interest income earned by the Trust
Fund since its inception.
Comparison of Revenues
The original 1989 total estimated revenue requirements to complete all Trust Fund
projects by fiscal year 2003 were approximately $ 12.1 billion. As of June 30, 1997, actual
gross revenues from all sources were $ 5,013,677,272, approximately $ 1.1 billion less than
original projected revenues for this 8- year period as shown in Exhibit 1. Gross revenues,
both actual and projected, are before any transfers to the General Fund. See page 17 for a
complete discussion of Trust Fund revenues.
Source: DOT Financial Records
EXHIBIT 1
ACTUAL GROSS REVENUES VS. PROJECTED GROSS REVENUES
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
Fiscal Year
0
200
400
600
800
1000
$ in Millions
ACTUAL PROJECTED
ACTUAL 416.6 523.5 546.2 581.7 652.7 713.1 762.1 817.7
PROJECTED 551.7 718 744.7 766 797.9 830.7 856.7 901.7
Investment Income
BACKGROUND INFORMATION
12
The 1995 General Assembly enacted the “ State Highway
Bond Act of 1996,” as set forth in Chapter 590 of the 1995
Session Laws, creating the State Highway Bond Fund. The Act authorizes the issuance of
$ 950,000,000 in bonds for the purpose of providing funds for constructing, improving and
relocating roads, bridges, tunnels, and other highway facilities constituting the urban
loops, highways in the Intrastate System, or a part of the State secondary highway system
as set forth in Chapter 692 of the 1989 Session Laws creating the Highway Trust Fund.
The bond issue was approved by a majority of qualified voters of the State of North
Carolina in a referendum held on November 5, 1996.
The proceeds of the bonds are appropriated to the Department of Transportation. The
legislation gives the Department authority to use bond funds along with other available
funds to pay some or all of the costs of Trust Fund projects. The Department is to
determine when the bond funds should be used with the following restrictions:
· $ 500,000,000 for urban loops;
· $ 300,000,000 for highways in the Intrastate System; and
· $ 150,000,000 for projects constituting a part of the State Secondary Highway System.
Debt service on the bonds will be provided from amounts deposited to the Highway Trust
Fund.
In November 1997, the North Carolina State Treasurer issued bonds totaling
$ 250,000,000. The Department had allocated approximately $ 51,000,000 of this amount
for Highway Trust Fund projects as of December 1997.
Expenditures/ Transfers
Funds from the Trust Fund are “ . . . annually appropriated to the Department of
Transportation to be allocated and used as provided . . .” in Article 14, Chapter 136 of the
General Statutes. Department management made the decision in 1989 when the Trust
Fund was established to use its existing accounting system for all Trust Fund activity.
Unlike other State agencies, the Department’s accounting system does not provide for
fund accounting. 5 Rather, it is set up as a “ work order” system, which accounts for all
expenditures related to the various components of a construction project. These work
orders are identified and approved by the Board of Transportation. All work orders are
processed by the Department’s Fiscal staff and are paid from the Department’s current
operating fund called the Highway Fund. On a monthly basis, funds are transferred from
the Highway Trust Fund to the Highway Fund for the actual expenditures made on the
Trust Fund’s behalf. These expenditures can and do include expenditures made for work
orders which have been approved for federal matching funds. Funds requested are
subsequently transferred from the Trust Fund to the Highway Fund as reimbursement of
costs incurred.
5 The Department is developing a system to adapt its current work order accounting system to properly
recognize fund accounting principles, with implementation anticipated in 2003.
Other Revenue Sources
BACKGROUND INFORMATION
13
EXHIBIT 2
TRUST FUND CONSTRUCTION EXPENDITURES FOR
INTRASTATE ROUTES AND URBAN LOOPS
Source: DOT Financial Records
$ 409
$ 514
$ 537
$ 572
$ 643
$ 200
$ 250
$ 300
$ 400
$ 500
$ 69
$ 181
$ 289
$ 240
$ 283
89- 90
90- 91
91- 92
92- 93
93- 94
FISCAL YEAR
$ 0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600 $ 700 $ 800
$ in Millions
REVENUE LIMITATION EXPENDITURES
Five- Year Construction
Expenditure Limitation
Distribution Formula
The legislation creating the Highway Trust Fund contains three restrictions on the
expenditures of Trust Fund revenue:
· a five- year limitation on construction spending,
· a requirement that highway construction funds be spent evenly throughout the State, and
· a two- year limitation on letting contracts in anticipation of revenue.
The act restricted the amount of Trust Fund revenue ( other
than revenue allocated for city streets or secondary roads)
that could be used to construct or improve highways during
the first five years of the Trust Fund
program. Exhibit 2 shows the actual
revenues, expenditures, and the set
limitations for fiscal years 1989- 90
through 1993- 94.6 Trust Fund
revenues in excess of the maximum
amounts could be used only for
preliminary planning and design and the
acquisition of rights- of- way for
scheduled highways and highway
improvements to be funded from the
Trust Fund. Table 10 shows the actual
expenditures for secondary roads and
state aid to municipalities for the same
period.
Table 10
HIGHWAY TRUST FUND EXPENDITURES
FOR SECONDARY ROADS AND AID TO MUNICIPALITIES
Fiscal
Year
Secondary
Roads
Aid To
Municipalities
Total
89- 90 $ 23,045,118 $ - 0- $ 23,045,118
90- 91 42,813,727 13,630,110 56,443,837
91- 92 42,663,737 16,129,070 58,792,807
92- 93 36,636,616 21,361,164 57,997,780
93- 94 49,740,787 23,571,485 73,312,272
TOTALS $ 194,899,985 $ 74,691,829 $ 269,591,814
Source: DOT Financial Records
GS § 136- 17.2A establishes a distribution formula for the
expenditure of all highway revenues, including Trust Fund,
for: the Intrastate System, Department appropriations, and federal revenue expended on
the Transportation Improvement Program ( TIP). The formula does not apply to
expenditures on urban loops. It also does not apply to secondary roads, contract
6 The difference between the expenditure limitation amounts and the actual expenditures may have been
obligated to contractors. See page 29 for discussion.
BACKGROUND INFORMATION
14
Source: DOT records
Region A Divisions 1, 4
Region B Divisions 2, 3
Region C Divisions 5, 6
Region D Divisions 7, 9
Region E Divisions 8, 10
Region F Divisions 11, 12
Region G Divisions 13, 14
Exhibit 3
NC HighwayTrust Fund
Equity Formula Regions
resurfacing, and small urban projects because they are not part of the TIP. The formula is
designed to ensure that every county in the State receives its fair share of transportation
improvements.
To apply the formula, the ex-isting
14 highway divisions
are divided into seven distri-bution
regions, each of which
contains two highway divi-sions.
These are called the
“ equity formula regions” as
shown in Exhibit 3. In any
consecutive seven- year pe-riod,
each region must receive
between 90% and 110% of
the amount calculated for it.
Calculating a region’s share
for a year is a multi- step pro-cess.
Annually, the Secretary
of Transportation is charged
with computing the distribu-tion
as follows:
· Estimate total anticipated revenues for next seven years beginning October 1.
· Determine each region’s percentage of total State population.
· Determine each region’s percentage of uncompleted intrastate miles in the State.
Each region’s share is the sum of the following numbers divided by 4:
· Region’s percentage share of uncompleted intrastate miles
· Population percentage share
· Population percentage share ( repeated)
· 14.29% ( equal to 1/ 7 representing each of the 7 regions).
For example, Region A’s percentage share on October 1, 1989 would have been
determined as follows:
Percentage of uncompleted intrastate miles 21.50%
Population percentage 10.20%
Population percentage ( repeated) 10.20%
The fraction 1/ 7 expressed as a percentage 14.29%
TOTAL 56.19% / 4 = 14.05%
Table 11 contains data showing the calculations for each region for 1989. Once a region’s
tentative share for a seven- year period is determined, DOT personnel can then determine
the region’s dollar share for the current fiscal year by multiplying the funds available for
the fiscal year by the region’s calculated percentage.
BACKGROUND INFORMATION
15
Table 11
1989 DATA SUPPORTING CALCULATION OF
HIGHWAY TRUST FUND EQUITY DISTRIBUTION
Region
Uncompleted
Intrastate
Miles In
Region
% Of Total
Uncompleted
Intrastate
Miles
Population
Of Region
( 000’ s)
% Of Total
Population
Percentage
Share Of
Highway
Funds
A 392.4 21.5 658.7 10.2 14.0
B 256.4 14.0 788.1 12.1 13.2
C 297.4 16.3 1,234.1 19.0 17.2
D 177.6 9.7 1,201.4 18.5 15.3
E 332.7 18.2 1,102.7 17.0 16.6
F 174.2 9.5 854.9 13.2 12.5
G 196.2 10.8 647.5 10.0 11.2
TOTALS 1,826.9 100.0% 6,487.4 100.0% 100.0%
Source: DOT Financial Records
Table 12, page 16 shows each region’s share by fiscal year for the first 8 years of the Trust
Fund.
GS § 136- 176( d) allows Trust
Fund projects to be let in
anticipation of revenue. However, the period for which revenue may be anticipated is
limited to the two- year period following the year in which the contract is let. Without this
limitation, contracts for Trust Fund projects could be let in anticipation of revenue for an
indefinite period. The certified, anticipated revenues of the Trust Fund for fiscal years
1997- 98 and 1998- 99 are $ 843,781,305 and $ 870,693,348, respectively.
Limit on Contracts Let in Anticipation of Revenue
BACKGROUND INFORMATION
16
Table 12
HIGHWAY TRUST FUND EQUITY DISTRIBUTIONS BY REGION: FY89- 90 THROUGH FY96- 97
($ in millions)
FY89- 90 FY90- 91 FY91- 92 FY92- 93 FY93- 94 FY94- 95 FY95- 96 FY96- 97
Region
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
%
Share
Total
Dollar
Share
A 14.0 $ 18.4 14.1 $ 21.7 14.0 $ 28.6 14.0 $ 31.5 14.3 $ 38.0 14.4 $ 42.5 14.8 $ 49.1 14.6 $ 52.6
B 13.2 17.3 13.3 20.4 13.4 27.4 13.4 30.1 13.0 34.6 13.0 38.3 13.1 43.4 13.1 47.2
C 17.2 22.6 17.2 26.4 17.5 35.7 17.5 39.4 17.7 47.0 17.8 52.5 17.6 58.4 17.6 63.4
D 15.3 20.0 15.2 23.4 15.1 30.9 15.1 33.9 14.9 39.6 14.8 43.6 14.7 48.7 14.7 53.0
E 16.6 21.8 16.7 25.7 16.7 34.1 16.7 37.6 16.8 44.6 17.0 50.1 16.8 55.7 17.1 61.6
F 12.5 16.4 12.3 18.9 12.3 25.1 12.3 27.7 12.2 32.4 12.1 35.7 12.0 39.8 12.1 43.6
G 11.2 14.7 11.2 17.2 11.0 22.5 11.0 24.7 11.1 29.5 10.9 32.1 11.0 36.5 10.8 38.9
TOTALS 100.0 $ 131.2 100.0 $ 153.7 100.0 $ 204.3 100.0 $ 224.9 100.0 $ 265.7 100.0 $ 294.8 100.0 $ 331.6 100.0 $ 360.3
Source: DOT Financial Records
SUMMARY OF FUNDS DISTRIBUTIONS BY REGION
($ in millions)
Fiscal
Year
A B C D E F G TOTALS
89- 90 $ 18.4 $ 17.3 $ 22.6 $ 20.0 $ 21.8 $ 16.4 $ 14.7 $ 131.2
90- 91 21.7 20.4 26.4 23.4 25.7 18.9 17.2 153.7
91- 92 28.6 27.4 35.7 30.9 34.1 25.1 22.5 204.3
92- 93 31.5 30.1 39.4 33.9 37.6 27.7 24.7 224.9
93- 94 38.0 34.6 47.0 39.6 44.6 32.4 29.5 265.7
94- 95 42.5 38.3 52.5 43.6 50.1 35.7 32.1 294.8
95- 96 49.1 43.4 58.4 48.7 55.7 39.8 36.5 331.6
96- 97 52.6 47.2 63.4 53.0 61.6 43.6 38.9 360.3
TOTALS $ 282.4 $ 258.7 $ 345.4 $ 293.1 $ 331.2 $ 239.6 $ 216.1 $ 1966.5
FINDINGS AND RECOMMENDATIONS
17
EXHIBIT 4
GALLONS OF MOTOR FUELS SOLD
FY89- 90 THROUGH FY97- 98
Source: North Carolina Department of Revenue
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97 97- 98
FISCAL YEAR
0
1
2
3
4
5
GALLONS ( in billions)
GALLONS 3.99 3.881 3.916 4.033 4.215 4.322 4.462 4.609 4.714
EVENUE PROJECTIONS
Objective: To determine the actual revenues received, compare
to original estimates, and estimate anticipated revenues for the
duration of the Trust Fund projects.
There are numerous uncertainties involved in making any revenue projections over a
number of years. When the revenues are sensitive to economic changes, those
uncertainties are compounded. Several events can dramatically affect the revenue
projections used in the TIP: foreign economic and political events, changes in the federal
motor fuels taxes, and the future direction of the national and State economies. Not
knowing the eventual outcome of these and other events makes estimating revenues an
inexact exercise requiring continuous monitoring and periodic adjustments. Given these
factors, we have identified several issues that we feel need the attention of the Board of
Transportation, the Department, and the General Assembly.
Conclusion: Overly optimistic initial revenue projections presented an unrealistic
expectation for completion of Trust Fund projects. In fiscal year
1991- 92, the Department began to make more conservative
projections. In our opinion, any future revenue projections should be
based on actual revenues collected. Using this methodology, we
project a $ 1.1 billion shortfall in the funds needed to fully pay for all
Trust Fund projects.
DEPARTMENT OFFICIALS
MADE OVERLY OPTIMISTIC
INITIAL TRUST FUND REVENUE
FORECASTS.
The primary revenue sources for the
Highway Trust Fund are the motor
fuels tax and a portion of the 3%
highway use tax. Both of these sources
are sensitive to changes in the national
and State economies. Years of
moderate growth in motor fuels usage
( Exhibit 4) and tax collections have
resulted in fairly steady revenues. Additionally, the Highway Trust Fund has not collected
the projected use tax revenues due to declining car sales and fewer motor vehicle title
transactions than anticipated. Exhibit 5 depicts the number of vehicles titled and
R
FINDINGS AND RECOMMENDATIONS
18
EXHIBIT 6
HIGHWAY TRUST FUND
DIFFERENCE IN ACTUAL VS. PROJECTED REVENUES:
FY89- 90 thru FY96- 97*
Source: DOT Financial Records
FISCAL YEAR ACTUAL PROJECTED DIFFERENCE
89- 90 $ 416.6 $ 551.7 -$ 135.1
90- 91 $ 523.5 $ 718.0 -$ 194.5
91- 92 $ 546.2 $ 744.7 -$ 198.5
92- 93 $ 581.7 $ 766.0 -$ 184.3
93- 94 $ 652.7 $ 797.9 -$ 145.2
94- 95 $ 713.1 $ 830.7 -$ 117.6
95- 96 $ 762.1 $ 856.7 -$ 94.6
96- 97 $ 817.7 $ 901.7 -$ 84.0
* Includes all sources of revenues ($ in millions)
registered each year for calendar years 1989 through 1997.7 While these graphs show
some fluctuations, overall changes have been minimal.
EXHIBIT 5
During the first year of the Highway
Trust Fund, fiscal year 1989- 90, the
Department projected $ 294.8
million in highway use tax collection
for the 10 months of the year the
tax was in effect. Actual highway
use tax revenues were $ 164.9
million, a shortfall of $ 129.9 million
in revenues for fiscal year 1989- 90.
For the following fiscal year 1990-
91, the Department projected that
highway use tax would continue to
increase by roughly 37% to $ 404.8
million for the full 12 months.
Actual revenues were $ 231.4
million for 1990- 91, a shortfall of $ 173.4 million for the year. For the initial two- year
period, the revenue shortfall in highway use tax alone amounted to $ 303.3 million less
than the projections made by the Department in 1989. This shortfall is related to the
conditions identified above and an overly optimistic forecast by officials at the State level.
Exhibit 6 shows the difference between the actual revenue collections and the original
projected revenues for the period fiscal years 1989- 90 through 1996- 97.
7 DMV records shows a cumulative total of 12,148,187 vehicles titled in North Carolina as of 12- 31- 97.
NUMBER OF VEHICLES TITLED
Source: North Carolina Division of Motor Vehicles
89 90 91 92 93 94 95 96 97
CALENDAR YEAR
0
0.5
1
1.5
2
2.5
Number in Millions
TITLED 1.98 1.71 1.57 1.7 1.82 2 2.01 2.09 2.11
NUMBER OF VEHICLES REGISTERED
89 90 91 92 93 94 95 96 97
CALENDAR YEAR
0
1
2
3
4
5
6
7
8
Number in Millions
REGISTERED 5.7 5.8 5.7 5.9 5.9 6.2 6.3 6.8 7
FINDINGS AND RECOMMENDATIONS
19
Table 13
ESTIMATED TRUST FUND COST AND MILEAGE
as of December 31, 1997
Cost Miles
Intrastate System $ 8,237,863,000 1,848.1
Urban Loops 3,373,196,000 225.9
TOTAL TRUST FUND COSTS $ 11,611,059,000 2,074.0
Source: 1997- 98 – 2003- 04 Transportation Improvement Program
EXHIBIT 7
HIGHWAY TRUST FUND
DIFFERENCE IN ACTUAL VS. REVISED PROJECTED REVENUES:
FY91- 92 thru FY96- 97*
Source: DOT Financial Records
FISCAL YEAR ACTUAL PROJECTED DIFFERENCE
91- 92 $ 546.2 $ 534.7 $ 11.5
92- 93 $ 581.7 $ 517.9 $ 66.8
93- 94 $ 652.7 $ 587.4 $ 65.3
94- 95 $ 713.1 $ 667.3 $ 45.8
95- 96 $ 762.1 $ 698.4 $ 63.7
96- 97 $ 817.7 $ 716.5 $ 56.2
* Includes all sources of revenues ($ in millions)
Because of changes in general economic conditions, forecasts need to be reviewed and
revised annually for the indi-vidual
revenue categories and
the Trust Fund in general. After
the first two years, Department
officials began to change reve-nue
projections annually to
show a more conservative
growth rate of approximately
3% per year. In fiscal year
1992- 93, the Department began
to use budget projections from
the Office of State Budget and
Management. The annually
revised projections are shown in
Exhibit 7 for fiscal years 1991-
92 through 1996- 97. As can be seen, the revised projections were lower than the actual
revenues.
RECOMMENDATION
The Department should continue to use realistic projections for
revenue growth from the Office of State Budget and Management.
All projections of revenues for the Highway Trust Fund should be
reviewed and revised annually. Projections should be based on the
actual revenues collected for the most recent prior year. ( See finding
below.) Projection procedures should take into account changes in
economic conditions at both the State and federal levels.
PROJECTED TRUST FUND REVENUES MAY NOT BE SUFFICIENT TO
MEET THE NEEDS OF THE PROGRAM.
Department officials are now
projecting that all Trust Fund
projects will be completed by
fiscal year 2013. Total costs
for the Trust Fund projects
are currently projected to be
$ 11.6 billion. ( See Table 13)
Using the actual fiscal year
1996- 97 revenues as the starting point, we projected total Trust Fund revenues for fiscal
years 1997- 98 through 2012- 13. We used a conservative 3% growth factor for revenues.
Table 14, page 21 shows that calculation with total revenues from all sources, including
interest income and transfers from the Highway Fund, to be $ 16.6 billion for that period.
However, as previously pointed out, the Trust Fund legislation restricts the percentage of
total revenues that can be used to plan, design, and construct the intrastate routes to
FINDINGS AND RECOMMENDATIONS
20
61.95% of revenues and 25.05% for the urban loops. Assuming a conservative estimate
for inflation ( 3%) and project growth ( 6%) 8, Table 14 also shows an estimated shortfall of
$ 1.1 billion for construction of intrastate routes and urban loops. Therefore, it would
require an additional two years of revenue at 3.0% growth to have sufficient funds for the
construction of the intrastate routes and urban loops as currently identified. As we noted
earlier, the State has approved the issuance of $ 950,000,000 of bonds for the construction
of various trust fund projects. While the bonds will supply cash for immediate
construction, they will have to be repaid. Therefore, based on our projections, the
Department will still need an additional $ 1.1 billion to fully pay for all Trust Fund projects.
RECOMMENDATION
Department officials and the Board of Transportation should
objectively review the current timetable for completion of the
intrastate routes and urban loops. Consideration should be given to
extending the completion dates for these projects beyond the year
2013 unless revenue increases are significantly more than three
percent per year.
8 The projections for inflation and project growth are those used by Peat Marwick, LLP, in the audit of the
Department of Transportation released in May, 1998. “ Project growth” refers to unanticipated changes to
the project such as increased costs for environmental impact or increased costs as the result of terrain.
FINDINGS AND RECOMMENDATIONS
21
Table 14
HIGHWAY TRUST FUND
PROJECTED REVENUES AND DISTRIBUTIONS: FY1997- 98 THROUGH FY2012- 13
Actual Projected Revenues Using A 3.00% Inflation Factor
1997
Net
Revenues
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TOTAL
REVENUE ( in dollars)
TITLE FEES 73,029,553 75,220,440 77,477,053 79,801,364 82,195,405 84,661,267 87,201,105 89,817,139 92,511,653 95,287,002 98,145,612 101,089,981 104,122,680 107,246,361 110,463,751 113,777,664 117,190,994 1,516,209,471
LIEN RECORDING 2,443,177 2,516,472 2,591,966 2,669,725 2,749,817 2,832,312 2,917,281 3,004,800 3,094,944 3,187,792 3,283,426 3,381,928 3,483,386 3,587,888 3,695,524 3,806,390 3,920,582 50,724,233
GASOLINE TAX 243,731,232 251,043,169 258,574,464 266,331,698 274,321,649 282,551,298 291,027,837 299,758,672 308,751,433 318,013,976 327,554,395 337,381,027 347,502,457 357,927,531 368,665,357 379,725,318 391,117,077 5,060,247,358
HIGHWAY USE TAX 407,577,335 419,804,655 432,398,795 445,370,759 458,731,881 472,493,838 486,668,653 501,268,712 516,306,774 531,795,977 547,749,856 564,182,352 581,107,823 598,541,057 616,497,289 634,992,208 654,041,974 8,461,952,603
MISCELLANEOUS
REGISTRATION FEES
10,244,618 10,551,957 10,868,515 11,194,571 11,530,408 11,876,320 12,232,610 12,599,588 12,977,576 13,366,903 13,767,910 14,180,947 14,606,376 15,044,567 15,495,904 15,960,781 16,439,604 212,694,537
INTEREST ON FUNDS INVESTED
BY TREASURER
35,719,382 36,790,963 37,894,692 39,031,533 40,202,479 41,408,553 42,650,810 43,930,334 45,248,244 46,605,692 48,003,863 49,443,978 50,927,298 52,455,117 54,028,770 55,649,633 57,319,122 741,591,081
SUBTOTAL REVENUES 772,745,297 795,927,656 819,805,485 844,399,650 869,731,639 895,823,588 922,698,296 950,379,245 978,890,624 1,008,257,342 1,038,505,062 1,069,660,213 1,101,750,020 1,134,802,521 1,168,846,595 1,203,911,994 1,240,029,353 16,043,419,283
TRANSFER FROM THE
HIGHWAY FUND
32,300,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 38,000,000 608,000,000
TOTAL REVENUES 805,045,297 833,927,656 857,805,485 882,399,650 907,731,639 933,823,588 960,698,296 988,379,245 1,016,890,624 1,046,257,342 1,076,505,062 1,107,660,213 1,139,750,020 1,172,802,521 1,206,846,595 1,241,911,994 1,278,029,353 16,651,419,283
Less Statutory Requirements
42.857% title fee collections 31,298,275 32,237,224 33,204,341 34,200,471 35,226,485 36,283,279 37,371,778 38,492,931 39,647,719 40,837,151 42,062,265 43,324,133 44,623,857 45,962,573 47,341,450 48,761,693 50,224,544 649,801,894
Administration 22,046,617 25,060,476 26,041,790 27,052,544 28,093,620 29,165,929 30,270,407 31,408,019 32,579,760 33,786,652 35,029,752 36,310,145 37,628,949 38,987,317 40,386,437 41,827,530 43,311,856 536,941,183.91
Transfer to General Fund 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 170,000,000 2,720,000,000
Total Statutory Requirements 223,344,892 227,297,700 229,246,131 231,253,015 233,320,105 235,449,208 237,642,185 239,900,950 242,227,479 244,623,803 247,092,017 249,634,278 252,252,806 254,949,890 257,727,887 260,589,223 263,536,400 3,906,743,077
Adjusted Revenue to be
Distributed as Follows
581,700,405 606,629,956 628,559,354 651,146,635 674,411,534 698,374,380 723,056,111 748,478,295 774,663,145 801,633,539 829,413,045 858,025,935 887,497,214 917,852,631 949,118,708 981,322,771 1,014,492,953 12,744,676,206
Interstate @ 61.95% 360,363,400 375,807,258 389,392,520 403,385,341 417,797,946 432,642,929 447,933,261 463,682,304 479,903,818 496,611,977 513,821,381 531,547,067 549,804,524 568,609,705 587,979,040 607,929,456 628,478,385 7,895,326,912
Urban Loops @ 25.05% 145,715,951 151,960,804 157,454,118 163,112,232 168,940,089 174,942,782 181,125,556 187,493,813 194,053,119 200,809,202 207,767,968 214,935,496 222,318,052 229,922,084 237,754,236 245,821,355 254,130,484 3,192,541,390
State Aid to Municipalities @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Secondary Roads @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,841 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Total Adjusted Revenues 581,700,404 606,629,956 628,559,354 651,146,635 674,411,534 698,374,380 723,056,111 748,478,295 774,663,145 801,633,539 829,413,045 858,025,935 887,497,214 917,852,631 949,118,708 981,322,771 1,014,492,953 12,744,676,206
Trust Fund Revenue Distributions
Interstate @ 61.95% 360,363,400 375,807,258 389,392,520 403,385,341 417,797,946 432,642,929 447,933,261 463,682,304 479,903,818 496,611,977 513,821,381 531,547,067 549,804,524 568,609,705 587,979,040 607,929,456 628,478,385 7,895,326,912
Urban Loops @ 25.05% 145,715,951 151,960,804 157,454,118 163,112,232 168,940,089 174,942,782 181,125,556 187,493,813 194,053,119 200,809,202 207,767,968 214,935,496 222,318,052 229,922,084 237,754,236 245,821,355 254,130,484 3,192,541,390
State Aid to Municipalities @ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
Secondary Roads
@ 6.5% 37,810,526 39,430,947 40,856,358 42,324,531 43,836,750 45,394,335 46,998,647 48,651,089 50,353,104 52,106,180 53,911,848 55,771,686 57,687,319 59,660,421 61,692,716 63,785,980 65,942,042 828,403,953
@ 42.857% 31,298,275 32,237,223 33,204,341 34,200,471 35,226,485 36,283,279 37,371,778 38,492,931 39,647,719 40,837,151 42,062,265 43,324,133 44,623,857 45,962,573 47,341,450 48,761,693 50,224,544 649,801,894
Total Secondary Roads 69,108,802 71,668,170 74,060,699 76,525,002 79,063,235 81,677,614 84,370,425 87,144,020 90,000,823 92,943,331 95,974,113 99,095,819 102,311,176 105,622,994 109,034,166 112,547,673 116,166,586 1,478,205,847
Total Revenue
Distributions
612,998,680 638,867,179 661,763,695 685,347,106 709,638,020 734,657,660 760,427,889 786,971,226 814,310,864 842,470,690 871,475,310 901,350,068 932,121,071 963,815,204 996,460,158 1,030,084,464 1,064,717,497 13,394,478,100
Combined Intrastate/ Urban
Expenditure Projections ( see Note)
605,273,000 623,431,000 642,134,000 661,398,000 681,240,000 701,677,000 722,727,000 744,409,000 766,741,000 789,744,000 813,436,000 837,839,000 862,974,000 888,864,000 915,529,000 942,995,000 12,200,411,000
Total Intrastate/ Urban Revenue
Availability
527,768,062 546,846,638 566,497,573 586,738,035 607,585,711 629,058,817 651,176,117 673,956,937 697,421,179 721,589,349 746,482,563 772,122,576 798,531,789 825,733,276 853,750,811 882,608,869 11,087,868,302
Overages ( Shortages) ( 77,504,938) ( 76,584,361) ( 75,636,427) ( 74,659,965) ( 73,654,289) ( 72,618,183) ( 71,550,883) ( 70,452,063) ( 69,319,821) ( 68,154,651) ( 66,953,437) ( 65,716,424) ( 64,442,211) ( 63,130,724) ( 61,778,189) ( 60,386,131) ( 1,112,542,698)
NOTE: The projections for inflation and project growth are those used by Peat Marwick, LLP, in the audit of the Department of Transportation released in May, 1998. “ Project growth” refers to unanticipated changes to the project such as increased costs for environmental impact or increased costs as the result of terrain.
Source: DOT Financial Statements for 1997 figures; OSA projections for remainder of table
FINDINGS AND RECOMMENDATIONS
22
[ This page left blank intentionally.]
FINDINGS AND RECOMMENDATIONS
23
Source: Transportation Improvement Program,
FY1997- 98 through FY2003- 2004
TRUST FUND
6.2%
OTHER
93.8%
162
2458
NUMBER OF PROJECTS
ROJECT STATUS
Objective: To identify the Trust Fund projects as contained in
legislation, determine the status of each project, compare original
cost and time estimates to current estimates, and estimate
completion dates based on data available.
In 1989, the General Assembly mandated specific roadways be constructed or improved as
part of the Trust Fund. Table 2, page 8, lists the 28 Intrastate System routes identified for
inclusion in the Highway Trust Fund program; the 7 urban loops are listed in Table 3, page
8. Since the legislation was passed, the estimated mileage has been amended for several of
the projects. Mileage for intrastate routes has been increased from 1844.2 miles estimated
in 1989 to 1847.929 miles as of December 31, 1997. Mileage for urban loops has been
increased from the 1989 estimate of 205.4 to 225.924 miles in December 1997. Overall,
this is only a 1.2% increase in mileage. Table 15, page 24, shows each project and its
status as of December 31, 1997. As discussed in the “ Background” section, specific
revenue sources were identified for the purpose of funding these improvements. Trust
Fund projects account for only 6% of the total projects included in the fiscal year 1997- 98
through 2003- 2004 TIP, but constitute approximately 55% of the projected costs in the
TIP. ( See Exhibit 8.)
The Trust Fund legislation gives the Department authority to “. . . . add a route to the
Intrastate System if the route is a multilane route and has been designed and built to meet
the construction criteria of the Intrastate System projects. No funds may be expended
from the Trust Fund on routes added by the Department.” However, the Department has,
and should, update the list of qualified Trust Fund projects that fall within the parameters
of projects included in the legislation.
EXHIBIT 8
HIGHWAY TRUST FUND PROJECTS AND COSTS
AS PERCENT OF TOTAL TIP PROJECTS AND COSTS
P
TRUST FUND
55.2%
OTHER
44.8%
$ 11.6
$ 9.4
COSTS ( in billions)
24
TABLE 15
HIGHWAY TRUST FUND - PROJECTS STATUS AS OF DECEMBER 1997
1989 Changes in Miles per TIP Changes in Cost Estimates per TIP
($ in 000)
Trust Fund Cost of Projects
($ in 000)
Percent of
Completion
Route
Prior
Costs*
Estimated
Costs ( 000)
1989
Estimate
Subsequent
Estimate
Increase/
Decrease
1990
Estimate**
Subsequent
Estimate
Increase/
Decrease
Actual **
Expenditures
Est. To
Complete
Total Cost**
Of Project Miles Dollars
I- 40 11,823 88,460 21.4 21.1 ( 0.3) 76,637 184,879 108,242 49,524 135,355 184,879 10% 27%
I- 77 400 35,400 8.9 13.6 4.7 35,000 64,176 29,176 62,338 1,838 64,176 90% 97%
I- 85 139,989 514,927 79.5 78.6 ( 0.9) 374,938 557,347 182,409 361,248 196,099 557,347 75% 65%
I- 95 50 2,260 0.0 0.9 0.9 2,210 3,580 1,370 0 3,580 3,580 100% 0%
US 1 1,994 248,291 100.1 100.9 0.8 246,297 337,027 90,730 186,331 150,696 337,027 55% 55%
US 13 0 104,000 45.9 45.7 ( 0.2) 104,000 164,155 60,155 1,822 162,333 164,155 0% 1%
US 17 29,127 600,405 200.0 220.0 20.0 571,278 995,863 424,585 152,779 843,084 995,863 27% 15%
US 19/( E) 0 98,250 40.0 39.5 ( 0.5) 98,250 145,300 47,050 8,669 136,631 145,300 0% 6%
US 19 19,297 306,477 27.1 27.8 ( 0.7) 287,180 335,195 48,015 3,050 332,145 335,195 9% 1%
US 23 1,037 136,737 30.0 28.9 ( 1.1) 138,700 282,389 143,689 2,235 280,154 282,389 22% 1%
US 23- 441 629 19,929 11.4 11.6 0.2 19,300 32,030 12,730 114,875 0 114,875 100% 100%
US 52 25,010 118,857 22.6 26.0 3.4 93,847 131,116 37,269 116,793 14,323 131,116 99% 89%
US 64/ 264 37,413 366,908 120.0 121.5 1.5 329,495 556,090 226,595 149,655 406,435 556,090 39% 27%
US 64 1,015 152,504 74.9 74.4 ( 0.5) 151,489 231,008 79,519 87,104 143,904 231,008 34% 38%
US 70 30,102 296,312 64.9 66.8 1.9 266,210 444,654 178,444 45,386 399,268 444,654 17% 10%
US 74 60,606 381,944 80.3 75.7 ( 4.6) 321,338 464,164 142,826 135,544 328,620 464,164 26% 29%
US 74 ( A) 22,620 84,220 18.3 18.0 ( 0.3) 61,600 42,435 ( 19,165) 28,104 14,331 42,435 100% 66%
US 158 856 517,737 245.9 249.2 3.3 516,881 662,819 145,938 45,471 617,348 662,819 7% 7%
Bridge ( US 158) 0 39,000 9.9 9.9 0.0 39,000 82,250 43,250 0 82,250 82,250 0% 0%
US 221 25,493 204,093 69.2 68.9 ( 0.3) 178,600 208,319 29,719 21,604 186,715 208,319 8% 10%
US 220 6,517 120,009 30.1 30.8 0.7 113,492 161,184 47,692 75,445 85,739 161,184 46% 47%
US220/ NC68 10,652 88,538 30.7 32.7 2.0 77,886 141,827 63,941 42,835 98,992 141,827 49% 30%
US 264 46,529 207,999 30.3 31.7 1.4 161,470 170,955 9,485 73,611 97,344 170,955 33% 43%
US 321 48,149 158,938 45.5 39.5 ( 6.0) 110,789 149,520 38,731 78,162 71,358 149,520 63% 52%
US 421 29,846 148,046 37.5 36.3 ( 1.2) 118,200 198,726 80,526 132 198,594 198,726 35% 0%
US 421( A) 11,144 171,984 71.0 63.669 ( 7.331) 160,840 321,271 160,431 78,124 243,147 321,271 16% 24%
NC 24- 27 17,809 466,439 195.2 191.551 ( 3.649) 448,630 734,478 285,848 102,172 632,306 734,478 22% 14%
NC 87 13,770 211,395 85.1 85.971 0.871 197,625 247,286 49,661 64,862 182,424 247,286 15% 26%
NC 105 0 34,700 30.0 18.303 ( 11.697) 42,925 52,340 9,415 0 52,340 52,340 20% 0%
NC 168 0 25,589 18.5 18.435 ( 0.065) 25,589 52,635 27,046 38,754 13,881 52,635 66% 74%
INTRASTATE 591,877 5,950,348 1844.2 1847.929 3.729 5,369,696 8,155,018 2,785,322 2,126,629 6,111,234 8,237,863 29% 26%
Asheville 0 99,300 0 3.5 3.5 99,300 118,100 18,800 691 117,409 118,100 0% 1%
Charlotte 49,904 863,016 63.4 72.946 9.546 813,112 969,287 156,175 322,636 646,651 969,287 32% 33%
Durham 0 101,516 16.4 19.499 3.099 101,516 143,036 41,520 845 142,191 143,036 0 0.01
Greensboro 600 315,338 41.6 41.782 0.182 314,738 733,464 418,726 75,416 658,048 733,464 1% 10%
Raleigh Loop 1,590 509,490 39.3 42.636 3.336 507,900 652,066 144,166 190,311 461,755 652,066 13% 29%
Wilmington Bypass 0 108,800 20.2 19.95 ( 2.5) 108,800 328,460 219,660 3,983 324,477 328,460 0% 1%
Winston/ Salem 0 209,856 24.5 25.611 1.111 209,856 428,783 218,927 20,457 408,326 428,783 0% 5%
URBAN LOOPS 52,094 2,207,316 205.4 225.924 20.524 2,155,222 3,373,196 1,217,974 614,339 2,758,857 3,373,196 14% 18%
Leg. Oversight Comm 664 664
Total 643,971 8,157,664 2049.6 2073.853 24.253 7,524,918 11,528,214 4,003,296 2,741,632 8,870,091 11,611,723 27% 24%
Percent Increase 1.2% 53%
Source: General Statutes, Board of Transportation Minutes; DOT Financial Records Notes: * Paid from Highway Fund prior to Trust Fund enactment; ** Exclude costs prior to 1990
FINDINGS AND RECOMMENDATIONS
25
Conclusions: Initial cost estimates for Trust Fund projects were significantly
understated, with Department cost estimates increasing 53% since
1989. While the Deparment has attempted to present more realistic
estimates since 1989, those estimates still do not factor in inflation or
cost overruns9. Trust Fund projects, comprising approximately 55%
of total TIP costs, are significantly affected by underestimated costs.
Additionally, the availability of funds affects the completion date of
Trust Fund projects.
The second major conclusion in this segment is that the Department
was not able to construct Trust Fund projects at the atnticipated rate
during the first five years. Nor was the Department able to
significantly accelerate construction of Trust Fund projects after the
initial five- year spending limitations expired. These factors have had
a significant effect on project completion dates. In our opinion, the
current construction schedule will not allow completion of all Trust
Fund projects by fiscal year 2013, as projected by the Department.
Assuming the magnitude of Trust Fund projects remains as currently
identified, continuation of construction at the current rate will put
the completion date in fiscal year 2018- 19, making it a 29 to 30 year
project.
THE CURRENT CONSTRUCTION SCHEDULE WILL NOT MEET THE
REVISED COMPLETION DATE OF 2013 FOR TRUST FUND PROJECTS.
The initial projection for the completion of Trust Fund projects was 13.5 years, with all
projects being completed by fiscal year 2003. As of December 31, 1997, only three trust
fund projects have been completed. However, there are 7 other projects that could have
been considered Trust Fund projects. Department officials chose not to use any Trust
Fund monies on these projects since it was anticipated they would be completed in a
relatively short period of time. These projects are listed in Table 16.
Table 16
TRUST FUND ELIGIBLE PROJECTS FOR WHICH
NO TRUST FUND MONIES HAVE BEEN EXPENDED
Route TIP ID # County Affected Description Status
I- 40 I- 900 Guilford, Forsyth Construct 21 mile multi- lane freeway added to TIP in
1983; only 3 miles in Guilford would have been eligible
for Trust Fund
Completed 1993
I- 40 I- 100
( changed to I-
40AJ)
Buncombe Identified in TIP as “ Trust Fund” but Board has not
approved any funds for project, nor has any Trust Fund
monies been expended
34% complete
US- 1 R- 501 Vance Widen Henderson Bypass added to TIP 1978; eligible
for Trust Fund
Completed 1992
US- 17 R- 1009 Perquimans Widen US- 17 from north of Hertford to SR 1367 added
to TIP in 1983; eligible for Trust Fund
Completed 1992
US- 64 R- 510 Martin, Washington Widen US- 64 from Jamesville to NC 45 added to TIP in
1978; eligible for Trust Fund
Completed 1990
US- 158 R- 520 Currituck Widen US- 158 from Point Harbor to Barco added to Tip
in 1978; eligible for Trust Fund
Completed 1991
US- 158 R- 2227 Dare Identified in TIP as “ Trust Fund” but Board has not
approved any funds for project, nor has any Trust Fund
monies been expended
Inactive as of 1992
Source: Transportation Improvement Program FY1995 to FY2001; Board minutes; DOT Financial Records
9 The May 1998 Peat Marwick, LLP report on the Department of Transportation found that cost estimates
for the projects contained in the TIP did not include inflation or project growth. Our audit of the Trust
Fund activities confirmed this finding.
FINDINGS AND RECOMMENDATIONS
26
FY89- 98 $ 200,000,000
FY90- 91 $ 250,000,000
FY91- 92 $ 300,000,000
FY92- 93 $ 400,000,000
FY93- 94 $ 500,000,000
.27x = 8 years
x = 8/. 27
x = 29.6 years
Since 1989, Department staff have revised the completion date for Trust Fund projects to
2013, making the Trust Fund a 23 year undertaking. However, for the eight years ending
December 1997, only 27% of the Trust Fund projects estimated to be completed by fiscal
year 2003 had been completed and only 24% of the Trust Fund dollars had been
expended. ( See discussion following for funding issues.) If
construction continues at the same pace, this would mean that it
would take 29.6 years to complete all projects currently identi-fied.
10 Exhibit 9, page 27, depicts the trust fund projects as well
as their status as of December 1997, as supplied by the Department of Transportation.
Examination of Department records showed that environmental considerations, right of
way acquisitions, planning and design requirements, and the number and frequency of
public meetings significantly impact the construction schedule. The majority of these
factors are outside the Department’s control, many being driven by legal requirements.
RECOMMENDATION
The Department should reexamine its construction scheduling proce-dures
to identify areas where delays can be prevented or minimized.
Steps should be taken to ensure that the projected completion date for
each project is realistic.
Auditor’s Note: This finding and recommendation supports the May 1998 Peat
Marwick finding relating to the need for strengthening the construction scheduling
requirements.
THE DEPARTMENT WAS NOT ABLE TO SIGNIFICANTLY ACCELERATE
TRUST FUND CONSTRUCTION AFTER THE EXPIRATION OF THE INITIAL
LIMITATIONS ON CONSTRUCTION EXPENDITURES.
The legislation establishing the Trust Fund placed
limitations on construction obligations for fiscal years
1989- 90 through 1993- 94 as shown on the left. It
appears the limitations were imposed to assure that
construction costs did not exceed revenues collected for
the first years of the Trust Fund. Actual expenditures for
this five- year period did not exceed the limitations, as shown in Exhibit 2, page 13.
According to Department management, only those Trust Fund projects already in the
fiscal years 1989- 90 through 1995- 96 TIP were begun or continued during the first five
years of the Trust Fund program. ( The Trust Fund projects that were in this TIP were at
various stages.) That TIP did not contain all the projects identified in the Trust Fund
legislation. Subsequent revisions to the list of projects included in the TIP added all Trust
Fund projects identified in legislation.
FINDINGS AND RECOMMENDATIONS
FINDINGS AND RECOMMENDATIONS
28
EXHIBIT 9
North Carolina Intrastate System Project Status ( includes Loops)
FINDINGS AND RECOMMENDATIONS
29
FINDINGS AND RECOMMENDATIONS
30
EXHIBIT 10
HIGHWAY TRUST FUND ALLOTMENTS VS. LIMITATIONS: FY89- 90 THROUGH FY93- 94
Source: DOT Financial Records
89- 90 90- 91 91- 92 92- 93 93- 94
FISCAL YEAR
0
100
200
300
400
500
600
$ in Millions
Allotments Limitations
Some factors which initially delayed the beginning of construction included: time
requirements for preliminary planning and engineering, increased environmental impact
requirements, right- of- way acquisitions and public awareness requirements. Department
management stated that new construction projects normally require several years of
preliminary work before construction can actually begin. Many of these factors affected
the Department’s ability to accelerate construction on projects already underway.
Table 17 below shows the differ-ence
between the available funding
and allotments for fiscal years
1989- 90 through 1993- 94. As
shown in Exhibit 10, the
Department did not expend or
obligate the total funds allowed by
the legislation for the first five
years. Through December 31,
1997, the eighth year of the Trust
Fund, the Department had
constructed only 29% of the
intrastate routes and only 14% of
the urban loops identified in the
Trust Fund legislation and had expended only 24% of the Trust Fund monies. For the
Trust Fund to be completed within the original time frame of 13.5 years, approximately
7.4% of the construction should have been completed each year. Therefore, at the end of
1997, the Department should have completed 59.2% of the construction to remain on
schedule. As of June 30, 1998, the Trust Fund had a cash balance of $ 952,524,394 of
which $ 103,329,468 was uncommitted.
Table 17
HIGHWAY TRUST FUND
AVAILABLE FUNDING AND ALLOTMENTS ( in millions)
FY
Net
Revenues
Required
Transfers*
Net
Available
Funding
Total Allot-ments
for
Intrastate/
Urban**
Available Minus
Allotments
89- 90 $ 408.7 $ 252.8 $ 155.9 $ 116.8 $ 39.1
90- 91 514.1 416.1 98.0 249.3 ( 151.3)***
91- 92 537.3 387.7 149.7 41.1 108.6
92- 93 572.0 418.1 153.8 83.3 70.5
93- 94 643.1 445.0 198.1 203.7 ( 5.6)
TOTALS $ 2,675.2 $ 1,919.7 $ 755.5 $ 694.2 $ 61.3
* Required transfers include allotments for administration, aid to municipalities, secondary road construction,
transfers to the highway fund and transfers to the general fund.
** Total allotments include the cities and towns participation and the property owners' participation.
*** The General Assembly required DOT to transfer $ 231,358,005 to the general fund which resulted in the
negative balance.
Source: DOT Financial Records
FINDINGS AND RECOMMENDATIONS
31
EXHIBIT 12
HIGHWAY TRUST FUND
CONSTRUCTION COSTS PER MILE
Source: DOT Fiscal Year Project Reports
2.9
10.5
4.5
14.9
INTRASTATE LOOPS
FISCAL YEAR
0
2
4
6
8
10
12
14
16
$ In Millions
1990 1997
55.2% increase
41.9% increase
Intrastate Increase: 89 to 90 = ( 0.1%)
90 to 97 = 51.9%
Loops Increase: 89 to 90 = ( 0.0%)
90 to 97 = 54.5%
EXHIBIT 11
CHANGES IN HIGHWAY TRUST FUND COSTS PROJECTIONS
Source: Transportation Improvement Program FY1989- 90 to 1995- 96 and FY1997- 98 to FY2003- 04
6
5.4
8.2
2.2
2.2
3.4
1989
1990
1997
FISCAL YEAR
0 2 4 6 8 10
$ in Millions
INTRASTATE LOOPS
RECOMMENDATION
As recommended previously, the Department should identify areas
where construction delays can be prevented or minimized. Steps
should be taken to more closely monitor construction progress to
make sure each project remains on schedule. Additionally,
Department management should accelerate existing projects to the
extent possible. This information should be shared with the Board of
Trustees, members of the General Assembly, and the public.
ESTIMATED COSTS FOR
TRUST FUND PROJECTS
HAVE INCREASED 53%
SINCE 1989.
In 1989 when the Trust Fund
was established, the projected
costs for the intrastate routes
was $ 5.4 billion for 28 routes
totaling 1,844.2 miles as shown
on Table 15, page 24. The
original projected costs for the 7
urban loops were $ 2.2 billion for
205.4 miles. The Department’s
most recent estimates of project
costs ( December 1997) were
$ 8.2 billion and $ 3.4 billion, respectively. Exhibit 11 compares original estimated costs to
current estimates. This represents a 53% increase in costs over the eight- year life of the
Trust Fund.
There are a number of reasons for
these increases. Original cost
projections were done using the
historical average cost per mile for
construction only and did not con-sider
any preliminary engineering
costs, inflation, and/ or cost over-runs.
Overruns can be caused by
adding additional mileage to the
project, specific needs related to
terrain, or changes in environ-mental
regulations. Examination
of expenditure records showed
that urban loops are more expensive per mile than construction on intrastate routes.
Exhibit 12 depicts the difference in cost per mile. Generally, intrastate routes are being
FINDINGS AND RECOMMENDATIONS
32
improved by adding lanes to existing highways. Urban loops, on the other hand, generally
have to be planned, designed, and constructed in areas where no roadway exists. This
process requires more up- front costs such as environmental studies and more extensive
purchase of land from property owners.
RECOMMENDATION
The Department should review its methodology for determining
project costs. The methodology should include consideration of all
relevant costs, including preliminary engineering costs, cost overruns,
and a conservative estimate for inflation. As discussed on page 19, we
estimate revenues to be short of the funds needed to complete the
currently identified Trust Fund intrastate and urban loop projects by
$ 1.1 billion through fiscal year 2012- 13.
Auditor’s Note: In its May 1998 report, Peat Marwick found that 31% of all
construction contracts in the last 10 years were not completed on schedule. Frequently,
projects that are not completed on schedule also experience cost overruns due to
increased materials costs. After examination of this issue, Peat Marwick recommended
that the Department strengthen its procedures for monitoring and managing
construction projects.
FINDINGS AND RECOMMENDATIONS
33
Example: Chatham County: 150 miles of unpaved state-maintained
roads. State: 10,000 miles of unpaved state-maintained
roads. Allocation in this example, Chatham County
would receive $ 1,030,050 ( 1.5% of $ 68.67 million).
Example: Chatham County: 40 miles of unpaved state-maintained
roads with a vehicular count of at least 50
vehicles per day. State: 4,000 miles of unpaved state-maintained
roads with a vehicular count of at least 50
vehicles per day. Allocated funds in excess of $ 68.67
million = $ 40 million. Allocation in this example,
Chatham County would receive $ 400,000 ( 1% of $ 40
million).
ECONDARY ROADS
Objective: To examine progress on completing paving of
secondary roads.
Revenue to support the secondary roads program comes from the Trust Fund ( 6.5%
allocation) and $ 15 of all motor vehicle title fees collected. GS § 136- 44.5 describes the
distribution of revenues to the respective counties. That statute requires the Department
to make an annual study of all state- maintained unpaved roads to determine the:
· number of miles of unpaved state- maintained roads in each county;
· total number of miles of unpaved state- maintained roads in the State;
· number of miles of unpaved state- maintained roads in each county that have vehicular traffic
of at least 50 vehicles a day; and
· the total number of miles of unpaved state- maintained roads statewide that have vehicular
traffic of at least 50 vehicles a day.
Except for federal- aid programs, the Department allocates all secondary construction
funds on the basis of a formula using the study figures determined above. Of the first
$ 68,670,000 in allocated funds, each county receives a percentage equal to the number of
miles of unpaved state-maintained
roads in the
county in proportion to the
total number of miles of
unpaved state- maintained
miles in the State.
If funds exceed $ 68,670,000, each county receives a percentage equal to the number of
miles of unpaved state- maintained
roads in the county with a traffic
count of at least 50 vehicles per day
in proportion to the number of
miles of unpaved state- maintained
roads in the State with a traffic
vehicular count of at least 50
vehicles per day.
Conclusions: The Department will not be able to meet the statutory
requirements set in the Trust Fund legislation regarding paving
of all secondary roads with a traffic count of at least 50 vehicles
per day by 1999. Our projections show secondary roads with 50+
vehicles a day will not all be paved until fiscal year 2004, with the
remaining secondary roads paved by fiscal year 2011.
S
FINDINGS AND RECOMMENDATIONS
34
EXHIBIT 13
MILES OF UNPAVED SECONDARY ROADS BY FISCAL YEAR
Source: DOT Highway and Road Mileage Report
BEGIN 89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
FISCAL YEAR
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
MILES
50+ VEHICLES TOTAL MILES
50+ VEHICLES 10475 9750 9025 8297 7626 6842 6114 5958 5232
TOTAL MILES 15948 14993 14144 13476 12900 12133 11424 10792 9972
EXHIBIT 14
MILES OF SECONDARY ROADS PAVED vs. DEPARTMENT GOALS
Source: DOT Highway and Road Mileage Report
89- 90 90- 91 91- 92 92- 93 93- 94 94- 95 95- 96 96- 97
FISCAL YEAR
0
200
400
600
800
1000
MILES
50+ VEHICLES TOTAL
50+ VEHICLES 725 725 728 671 784 728 156 726
TOTAL 815 893 808 753 824 863 870 810
755 805 771 858 858 854 902 858 GOAL
THE ANNUAL PAVING GOALS FOR SECONDARY ROADS WILL NOT MEET
THE STATUTORY TIME REQUIREMENTS.
In 1989, North Carolina
had 15,948 miles of
unpaved state- main-tained
roads, 10,475
miles of which were
roads with a traffic
count of 50 vehicles or
more per day. GS
§ 136- 182 requires the
Department to pave, by
fiscal year 1999, all un-paved
state- maintained
roads with a traffic
vehicular count of 50 or
more vehicles per day.
( See related finding on
page 35.) This means the Department should have paved approximately 1,050 miles of
secondary roads per
year to achieve this
goal. As shown in
Exhibits 13 and 14,
the annual paving
goals set by the
Department were
not sufficient to
meet the 1999 dead-line,
with only 6,661
miles planned for
paving through
fiscal year 1996- 97.
The Department has
actually paved a
total of 6,636 miles,
of which 5,243 miles were for roads with 50+ vehicles, or only 62.4% of the necessary
miles. This leaves some 5,232 miles of roads with 50+ vehicles still to pave at December
31, 1997.11 ( See finding on page 37.) As shown in Table 18, all unpaved secondary roads
would not be completed, based on the Department’s average rate of paving, until fiscal
year 2011. The goal of paving all secondary roads with 50 or more vehicles per day
would not be reached until fiscal year 2004, again using the Department’s average rate for
paving through fiscal year 1996- 97. While the main factor in not achieving the paving
mandate has been setting the paving goal too low, a factor contributing to the delay is the
11 The Department has increased its paving goals for secondary roads for FY97- 98 to 1,155 miles.
FINDINGS AND RECOMMENDATIONS
35
Table 18
SCHEDULE OF UNPAVED SECONDARY ROADS
As of December 1997
( bold numbers indicate projected values)
Total Unpaved Secondary Miles Unpaved Miles Of
50+ Vehicles
Year
End
June 30
Actual
Miles
Paved
Net
Change
Additions
( Removals)
To System
Total
Unpaved
Miles
Miles
Paved
Each
Year
Total
Miles
Begin 89 15,948 10,475
1990 815 ( 140) 14,993 725 9,750
1991 893 44 14,144 725 9,025
1992 808 140 13,476 728 8,297
1993 753 177 12,900 671 7,626
1994 824 57 12,133 784 6,842
1995 863 154 11,424 728 6,114
1996 870 238 10,792 156 5,958
1997 810 ( 10) 9,972 726 5,232
1998 830 85 9,227 655 4,577
1999 830 85 8,482 655 3,922
2000 830 85 7,737 655 3,267
2001 830 85 6,992 655 2,612
2002 830 85 6,247 655 1,957
2003 830 85 5,502 655 1,302
2004 830 85 4,757 647 0
2005 830 85 4,012
2006 830 85 3,267
2007 830 85 2,522
2008 830 85 1,777
2009 830 85 1,032
2010 830 85 287
2011 372 85 0
Source: DOT Highway and Road Mileage Report; OSA projections in bold
continual change in the number of miles of unpaved state- maintained roads. New unpaved
roads ( including new housing subdivisions) continue to be accepted into the state-maintained
system increasing the total mileage. Conversely, municipal expansions of
corporate limits reduce the total mileage to be paved. Approximately 85 miles of unpaved
new roads per year have been added to the state- maintained system since the Trust Fund
began.
RECOMMENDATION
Department management
should request a modifi-cation
to the legislation
for a more realistic date
to complete paving of
secondary roads with
50+ vehicles per day traf-fic.
The Department
should take steps to
modify its time goal for
paving all unpaved sec-ondary
roads with traffic
of 50 or more vehicles
per day. Maximum
effort should be extended
to pave as many miles of
the mandated secondary
roads as possible each
year.
Auditor’s Note: The State Auditor is in the process of reviewing operations at
maintenance units. Maintenance units are responsible for paving secondary roads.
FINDINGS AND RECOMMENDATIONS
36
UNDER CURRENT BOARD POLICY, THE DEPARTMENT WILL NOT BE
ABLE TO PAVE ALL UNPAVED SECONDARY ROADS WITH 50+ VEHICLE
TRAFFIC.
The Department of Transportation accepted all existing unpaved secondary roads into the
state- maintained system in 1931. A number of these roads were accepted with only a
“ ditch- to- ditch” right of way. At the time they were accepted, there was no statutory
requirement that the Department acquire right- of- ways. In 1959, the General Assembly
passed legislation ( GS § 47- 27) that requires the Department to record deeds of easement
with the local Register of Deeds office. The Board of Transportation adopted policy
requiring that all unpaved roads accepted into the state- maintained system include the
appropriate right- of- way easement, approximately 30 feet on each side. It is also Board
policy that all property owners on any unpaved secondary road must donate the right- of-way
before the Department will pave it. Thus far, Department personnel have identified
through the priority ranking system ( see finding on page 37) 1,171 roads constituting
approximately 822 miles of unpaved roads in the system which do not meet the right- of-way
requirements for paving. Of these, approximately 726 miles are for roads with a
traffic vehicle count of 50+, as shown in Table 19, page 36. Therefore, the Department
cannot meet the statutory requirement of paving all unpaved roads in the State with a
daily traffic vehicle count of 50+.
RECOMMENDATION
The Department should immediately undertake identifying all state-maintained
unpaved secondary roads that do not have the
appropriate right- of- ways. This information should also contain data,
where known by the Department, regarding the willingness of
property owners to donate the right- of- ways. This information should
be used as a basis for requesting modification of the Trust Fund
legislation requiring the paving of all secondary roads with a daily
traffic vehicle count of 50+. ( See previous recommendation.)
FINDINGS AND RECOMMENDATIONS
37
Table 19
SUMMARY OF SECONDARY ROADS WITH IDENTIFIED UNAVAILABLE RIGHT- OF- WAY
DIV.
COUNTY
TOTAL
NUMBER
LENGTH OF
ROADS
WITH 50+
VEHICLE
TRAFFIC
TOTAL
MILEAGE WITH
UNAVAILABLE
RIGHT- OF- WAY DIV.
COUNTY
TOTAL
NUMBER
LENGTH
OF ROADS
WITH 50+
VEHICLE
TRAFFIC
TOTAL
MILEAGE WITH
UNAVAILABLE
RIGHT- OF- WAY
1 Bertie 6 4.50 11.20 8 Chatham 18 12.42 13.12
Camden 11 6.59 7.92 Hoke 6 4.39 6.29
Chowan 3 0.90 1.50 Lee 5 1.00 1.21
Currituck 10 5.36 5.71 Montgomery 3 2.90 2.90
Dare 0 0.00 0.00 Moore 20 11.25 14.69
Gates 12 12.65 14.16 Randolph 14 5.54 5.74
Hertford 4 3.80 7.50 Richmond 10 4.94 5.60
Hyde 12 6.76 11.64 Scotland 19 11.18 16.71
Martin 3 4.90 4.90 Division Totals 95 53.62 66.26
Northampton 12 12.20 14.33 9 Davidson 15 6.32 6.99
Pasquotank 5 2.65 2.65 Davie 14 10.31 12.65
Perquimans 1 0.63 0.63 Forsyth 22 7.32 8.27
Tyrrell 7 1.30 6.10 Rowan 8 3.71 4.06
Washington 1 1.20 1.20 Stokes 12 6.19 6.90
Division Totals 87 63.44 89.44 Division Totals 71 33.85 38.87
2 Beaufort 10 7.90 8.60 10 Anson 4 1.05 4.25
Carteret 1 1.06 1.06 Cabarrus 0 0.00 0.00
Craven 1 0.40 0.40 Mecklenburg 8 2.62 3.92
Greene 0 0.00 0.00 Stanly 2 1.10 1.10
Jones 2 1.30 1.49 Union 4 2.80 2.80
Lenoir 1 0.60 0.60 Division Totals 18 7.57 12.07
Pamlico 4 1.21 1.43 11 Alleghany 9 7.93 8.88
Pitt 2 0.00 1.20 Ashe 15 10.20 10.40
Division Totals 21 12.47 14.78 Avery 16 7.07 7.19
3 Brunswick 6 2.64 2.64 Caldwell 18 6.80 6.92
Duplin 12 7.63 8.23 Surry 12 1.47 2.13
New Hanover 2 0.78 0.78 Watauga 23 21.53 25.09
Onslow 3 1.00 1.10 Wilkes 12 5.22 5.87
Pender 8 5.49 6.26 Yadkin 4 2.09 2.24
Sampson 2 1.60 1.60 Division Totals 109 62.31 68.72
Division Totals 33 19.14 20.61 12 Alexander 0 0.00 0.00
4 Edgecombe 1 1.50 1.50 Catawba 0 0.00 0.00
Halifax 18 13.89 14.12 Cleveland 1 0.00 0.20
Johnston 12 11.96 12.50 Gaston 0 0.00 0.00
Nash 1 0.60 0.60 Iredell 8 6.53 6.89
Wayne 1 1.20 1.20 Lincoln 8 0.00 0.00
Wilson 4 2.30 3.00 Division Totals 17 6.53 7.09
Division Totals 37 31.45 32.92 13 Buncombe 18 4.80 6.03
5 Durham 1 0.26 0.26 Burke 13 4.19 4.32
Franklin 1 0.10 0.10 Madison 13 9.14 9.94
Granville 1 2.00 2.00 McDowell 19 6.35 6.90
Person 5 1.40 1.55 Mitchell 11 6.92 6.92
Vance 1 0.70 0.70 Rutherford 7 1.54 2.19
Wake 5 4.14 4.14 Yancey 13 9.45 9.45
Warren 3 1.82 1.82 Division Totals 94 42.39 45.75
Division Totals 17 10.42 10.57 14 Cherokee 25 14.18 14.96
6 Bladen 15 20.59 20.89 Clay 22 10.80 12.66
Columbus 23 19.07 19.76 Graham 17 10.03 12.35
Cumberland 16 14.76 14.76 Haywood 50 29.59 30.29
Harnett 19 12.55 13.26 Henderson 50 40.05 40.67
Robeson 67 54.43 67.95 Jackson 59 34.52 36.36
Division Totals 140 121.40 136.62 Macon 78 57.11 58.92
7 Alamance 8 2.98 3.00 Polk 16 8.58 10.68
Caswell 7 5.95 6.65 Swain 28 10.00 12.71
Guilford 21 6.45 6.99 Transylvania 12 7.07 7.40
Orange 18 8.32 8.37 Division Totals 357 221.93 237.0
Rockingham 29 15.85 16.65
Division Totals 83 39.55 41.66 GRAND TOTALS 1,171 726.07 822.36
Source: DOT, Division of Secondary Roads
FINDINGS AND RECOMMENDATIONS
38
EXHIBIT 15
PRIORITY SYSTEM FOR PAVING OF SECONDARY ROADS
Points
Land Use and Public Service Characteristics:
Homes ( 6 points each [ seasonal homes 3])
Schools ( 10 points each)
Churches ( 10 points each)
Businesses ( 10 points each)
Industries ( 10 points each)
Recreational Facilities ( 5 points each)
Sub- Total
Sub- Total divided by length of road ( not less than 1 mile)
Traffic Characteristics
School Bus Route ( 10 points)
Average Annual 24- hour traffic volume
Total
General Route Characteristics
Value of the road as a County Thoroughfare ( 10 points)
TOTAL OF THE THREE CHARACTERISTICS
Source: DOT Division of Secondary Roads
DEPARTMENT PROCEDURES FOR PRIORITIZING THE PAVING OF
SECONDARY ROADS HAVE NOT ASSURED COMPLIANCE WITH
STATUTES.
The Department uses a
“ points rating system” to
schedule paving of unpaved
state- maintained roads. Each
unpaved road is evaluated by
the Department’s Division
personnel and is awarded
points based on three cate-gories
of impact as shown in
Exhibit 15.
The unpaved roads within a
county are then ranked
according to total points, and
the top 10 roads are listed on
the annual work plan for the
county. ( See Auditor’s Note page 34.) The priority list for paving of secondary roads
becomes a public document at this point. When a secondary road in a county is placed on
the “ to be paved list”, it cannot be removed until it is paved. It is Department policy that
all secondary roads in a county be paved, insofar as possible, in the priority order of the
list. When a road is paved, it is removed from the list and the next highest ranked
secondary road is moved up. The local Board of County Commissioners may recommend
to the Board of Transportation deviations in the paving projects and/ or the priority of
paving projects after holding a pre- announced public meeting. Any recommendation for a
deviation must state the specific reason( s). The Board of Transportation considers such
recommendations in light of compatibility with its general plans, standards, criteria, and
available funds, while giving due regard to development plans of the county and to the
maintenance and improvement needs of all existing roads in the county. As seen in the
finding on page 34, this process has not worked to assure compliance with the statutory
requirement of having all unpaved roads with 50+ vehicle traffic paved by 1999.
RECOMMENDATION
Department management should review the procedures for
prioritizing secondary roads for paving, identifying any changes
needed. Further, Department, Division, and District management
should more closely monitor each county maintenance unit’s progress
in paving secondary roads with 50+ vehicle traffic.
FINDINGS AND RECOMMENDATIONS
39
RUST FUND EXPENDITURES AND TRANSFERS
Objective: To examine Trust Fund procedures for expenditure and
transfer of funds, including the use of administrative funds and the
number and type of positions charged to the Trust Fund.
The Highway Fund requests monthly reimbursement from the Federal Highway
Administration for the federal matching funds on approved projects. Once the federal
matching funds are received, the money is deposited in the Highway Fund. Table 20, page
39 shows the actual expenditure transfers from the Highway Trust Fund to the Highway
Fund for construction of intrastate and urban loop projects. At June 30, 1997, the Trust
Fund had a cash balance of $ 701,621,362. The same general procedures are followed for
the Trust Fund administrative monies in that the actual payments are made by the Highway
Fund, which is reimbursed by the Trust Fund. ( See Table 23, page 42.)
To examine the procedures used in the expenditure and transfer of Trust Fund monies, we
reviewed a sample of transfers and expenditures from fiscal years 1989- 90 to 1997- 98.
Additionally, we reviewed existing policies and procedures governing the use of Trust
Fund monies. To determine the number and type of positions charged to the Trust Fund,
we examined organizational charts, position descriptions, and payroll data. We discussed
with Department management in detail the functions and duties assigned to positions
supported with Trust Fund monies.
Conclusions: Allowing the Trust Fund to be reimbursed any federal matching funds
for qualifying Trust Fund projects would provide additional funds to
reduce the completion timeframe for Trust Fund projects. However,
this change would require a major policy shift in the State’s
transportation priorities. Such a change would need to be carefully
considered by the General Assembly and the Department.
Additionally, administrative expenditures for the Trust Fund and the
Highway Fund are lumped together, not accounted for separately.
The Highway Trust Fund pays for 1,133 positions located throughout
the Department’s organizational structure due to the many functions
necessary to support the planning, administering, designing, and
constructing of the Trust Fund projects. While “ work order” ( field)
positions perform duties directly related to Trust Fund projects,
administrative positions funded by the Trust Fund provide support
for both Trust Fund and Highway Fund projects. Administrative
positions are not required to capture the time spent on each type
fund, nor has the Department prepared a formal plan for the
reduction or reassignment of Trust Fund positions as the projects are
completed. Lastly, the Department does not have written procedures
for expenditure of Trust Fund monies.
T
FINDINGS AND RECOMMENDATIONS
40
Table 20
HIGHWAY TRUST FUND
ACTUAL TRANSFERS TO THE HIGHWAY FUND FOR CONSTRUCTION PROJECTS
Fiscal Year
89- 90
Fiscal Year
90- 91
Fiscal Year
91- 92
Fiscal Year
92- 93
Fiscal Year
93- 94
Fiscal Year
94- 95
Fiscal Year
95- 96
Fiscal Year
96- 97
July $ $ $ 35,484,699 $ $ $ $ $
Aug. 35,486,742 8,970,063 36,308,767 21,501,142
Sept 21,199,099 26,653,398 19,739,455 21,758,802 12,545,632 46,792,488
Oct. 26,760,736 5,259,471 9,193,369 16,797,475 53,395,864 18,927,293
Nov. 10,016,723 8,498,105 37,136,517 23,094,368 9,758,206 4,603,601
Dec. 14,765,778 18,030,111 14,733,425 20,390,808 6,529,394
Jan 6,983,062 10,746,824 6,540,693 14,436,529 18,034,879 14,450,098
Feb. 27,116,077 11,524,698 3,335,160 5,950,835 14,481,637 13,540,853 8,808,248 25,727,213
March 19,924,000 6,005,136 11,294,157 6,092,031 4,908,025 19,069,728
April 27,087,828 9,304,674 9,890,864 10,384,242 25,039,914 3,334,869
May 2,924,000 14,174,535 6,986,403 18,573,400 18,152,933 19,199,402 38,888,512
June 21,094,032 9,015,202 34,720,939 33,110,281 30,716,067 38,818,911 11,194,277 27,450,317
Total $ 48,210,109 $ 112,799,206 $ 145,838,217 $ 127,280,905 $ 184,566,333 $ 214,118,336 $ 204,776,397 $ 205,773,513
Cumulative $ 48,210,109 $ 161,009,315 $ 306,847,532 $ 434,128,437 $ 618,694,770 $ 832,813,106 $ 1,037,589,503 $ 1,243,363,016
Fiscal Year Intrastate Urban Total
1989- 90 $ 40,393,052 $ 7,817,057 $ 48,210,109
1990- 91 68,877,280 43,921,926 112,799,206
1991- 92 67,954,052 77,884,165 145,838,217
1992- 93 74,932,473 52,348,432 127,280,905
1993- 94 104,520,993 80,045,340 184,566,333
1994- 95 109,949,086 104,169,250 214,118,336
1995- 96 147,603,619 57,172,778 204,776,397
1996- 97 107,658,169 98,115,344 205,773,513
Total $ 721,888,723 $ 521,474,292 $ 1,243,363,016
FINDINGS AND RECOMMENDATIONS
41
Table 21
HIGHWAY TRUST FUND AUTHORIZED EXPENDITURES BY ROUTE
For 1989 through 1997
Project Federal Trust Fund Total
INTRASTATE ROUTES
I- 40 $ 33,784,997 $
17,903,311
$
51,688,308
I- 77 22,546,250 39,863,548 62,409,798
I- 85 277,311,065 84,163,812 361,474,877
US 1 35,504,651 147,973,982 183,478,633
US 13 900,000 2,055,000 2,955,000
US 158 980,000 25,184,221 26,164,221
Bridge US 158 0 2,100,000 2,100,000
US 17 76,450,116 168,687,012 245,137,128
US 19 9,915,669 32,762,867 42,678,536
US 220 40,448,953 42,255,683 82,704,636
US 220/ NC 68 5,747,701 46,366,258 52,113,959
US 221 6,640,000 15,495,000 22,135,000
US 23 38,088,226 20,984,313 59,072,539
US 23/ 44 5,449,600 28,275,744 33,725,344
US 264 62,178,661 33,188,040 95,366,701
US 321 55,099,855 49,796,298 104,896,153
US 421 10,160,000 103,185,786 113,345,786
US 421A 17,419,535 5,388,513 22,808,048
US 52 30,544,420 98,355,810 128,900,230
US 64 79,236,305 53,948,435 133,184,740
US 64/ 264 18,639,326 174,806,245 193,445,571
US 70 14,018,564 30,600,768 44,619,332
US 74 43,693,610 196,864,550 240,558,160
US 74A 15,583,551 18,152,320 33,735,871
NC 24 28,913,230 85,737,246 114,650,476
NC 87 27,276,807 49,776,386 77,053,193
NC 105 3,553,562 1,198,502 4,752,064
NC 168 0 52,486,417 52,486,417
STATEWIDE 0 750,000 750,000
Intrastate Totals $ 960,084,654 $ 1,628,306,067 $ 2,588,390,721
37.1% 62.9% 100.0%
LOOPS
Asheville Loop $ 520,000 $
130,000
$
650,000
Charlotte Loop 271,364,938 151,382,221 422,747,159
Durham Loop 0 1,800,000 1,800,000
Greensboro Loop 57,092,288 125,238,704 182,330,992
Raleigh Loop 186,534,616 106,889,365 293,423,981
Wilmington Bypass 3,200,000 7,760,000 10,960,000
Winston/ Salem Loop 13,200,000 24,745,000 37,945,000
Loop Totals $ 531,911,842 $
417,945,290
$
949,857,132
56.0% 44.0% 100.0%
GRAND TOTALS $ 1,491,996,496 $ 2,046,251,357 $ 3,538,247,853
FEDERAL MATCHING FUNDS RECEIVED FOR TRUST FUND PROJECTS
ARE DEPOSITED INTO THE HIGHWAY FUND ACCOUNT.
Each year the Depart-ment
requests approval
from the Federal High-way
Adminisration for
federal matching funds
for qualifying projects,
including Trust Fund
projects. The typical
funding ratio is 80% fed-eral
and 20% State funds
for all federally approved
work orders. As expen-ditures
are incurred on
federally approved Trust
Fund work orders, the
Department pays the bills
through the Highway
Fund with State funds.
At the end of each
month, the Trust Fund
reimburses the Highway
Fund total costs for Trust
Fund projects. Each
month, the Department
requests reimbursement
from the federal govern-ment
for expenditures on
federally approved work
orders, including Trust
Fund work orders. Cur-rently,
the Department
deposits federal matching
funds received for Trust
Fund projects into the
Highway Fund, not back
into the Trust Fund. GS
§ 136- 176( c) says that the
Secretary may transfer “ .
the amount of federal
funds received [ for a Trust Fund project] plus the amount of any funds from the Highway
Fund that were used to match the federal funds . . .” from the Trust Fund to the Highway
FINDINGS AND RECOMMENDATIONS
42
Table 22
TRUST FUND ADMINISTRATIVE FUNDS
Fiscal
Year
Total Administrative
Funds Available
Expenditures
And/ Or Transfers
Amount
Reverted To
Trust Fund
89- 90 $ 10,726,814 $ 10,150,000 $ 576,814
90- 91 11,922,106 11,141,990 780,116
91- 92 14,393,401 13,160,822 1,232,579
92- 93 15,843,011 13,171,828 2,671,183
93- 94 18,997,668 15,711,750 3,285,918
94- 95 20,731,248 15,080,459 5,650,789
95- 96 20,996,319 15,923,483 5,072,836
96- 97 22,046,617 22,046,617 - 0-
TOTALS $ 135,657,184 $ 116,386,949 $ 19,270,235
Source: DOT Fiscal Division
Fund. Those funds can then be used for any project in the Transportation Improvement
Plan
Based on the language in the legislation, the Department’s policy is to deposit all federal
matching funds received, including those for Trust fund projects, into the Highway Fund.
These funds are in turn used for TIP- approved projects that are not Trust Fund projects.
While the legislation clearly allows this practice, the effect is that State funds are paying
for all Trust Fund projects even though some of these projects qualify for federal
matching. The Department’s position is that it was the General Assembly’s intent that
State funds pay for all Trust Fund projects and that any federal matching funds received
for Trust Fund projects are “ extra.”
From July 1989 through December 1997, the Board of Transportation has approved
$ 1.492 billion of federal funds ( Table 21) to be spent on intrastate and urban loop
projects. Through December 31, 1997, $ 1.247 billing had been transferred from the Trust
Fund to the Highway Fund for the State and federal portions of Trust Fund projects. We
could not readily determine from the Department’s accounting system how much of this
was for federal matching. If the federal match reimbursement for Trust Fund projects was
deposited back into the Trust Fund to be used on other Trust Fund projects, there would
be additional funds to complete Trust Fund projects in a more timely manner. ( See
discussion on project status beginning on page 23.)
RECOMMENDATION
The General Assembly and the Department should consider this issue
in detail. A decision should be made as to whether the construction
and completion schedule for Trust Fund projects should be given
priority over all other State road construction. The federal- matching
funds could be used to supplement the Trust Fund by replacing the
Trust Fund monies transferred to the Highway Fund for the federal
match share of Trust Fund work orders. Allowing the Trust Fund to
be reimbursed any federal matching funds, while benefiting the Trust
Fund, would require a major policy shift and could significantly
impact the State’s overall road construction program. However, this
change would provide additional funds to reduce the completion
timeframe for Trust Fund projects.
TRUST FUND ADMINISTRATIVE EXPENDITURES ARE NOT ACCOUNTED
FOR SEPARATELY.
GS § 136- 176 ( b) states that “. . . a sum, not to exceed four and one- half percent ( 4.5%)
of the amount of revenue . . . may be used each fiscal year by the Department for expenses
to administer the Trust Fund.” Administrative funds not expended during a given fiscal
year revert back to the Trust Fund for use on Trust Fund projects, as mandated by
legislation. Table 22 shows the amount of administrative funds for the Trust Fund since
FINDINGS AND RECOMMENDATIONS
43
Table 23
NUMBER OF POSITIONS FUNDED THROUGH THE
TRUST FUND BY YEAR
Fiscal
Year
Administrative
Positions
Work
Order
Positions
Cumulative
Totals
89- 90 167.6 503 670.6
90- 91 7 86 763.6
91- 92 38 256 1057.6
92- 93 9 16 1082.6
93- 94 3 43 112.6
94- 95 ( 4) 1 1125.6
95- 96 3 0 1128.6
96- 97 4 0 1132.6
97- 98 0.4 0 1133.0
TOTALS 228 905
Source: DOT Personnel Division
its inception. The Trust Fund was initiated to fund specific projects as discussed on page
8. All other Department operations are supported by the Highway Fund. The actual
administrative expenditures for Trust Fund projects are combined with those for Highway
Fund operations. Department management’s rationale for this accounting practice is that
most Trust Fund administrative expenditures also provide support for Highway Fund
operations. However, setting up each fund so that it would have a set of segregated
accounts for actual expenditures would allow for more accurate budgeting and accounting
for funds actually used to support each type of activity.
RECOMMENDATION
To more accurately reflect actual expenditures, the Department
should develop a chart of accounts which is dedicated strictly to Trust
Fund operations.
THE DEPARTMENT DOES NOT HAVE A FORMAL PLAN FOR TRUST FUND
POSITION REDUCTION.
The Highway Trust Fund, established in
1989, was initially planned to be a 13.5- year
undertaking. Although the Department will
not be able to meet the 13.5 year goal, the
Trust Fund will cease to exist when the
projects are completed and the revenues
supporting the Trust Fund are statutorily
repealed. ( General Statutes Article 14,
Chapter 136) In order to handle the
anticipated acceleration of the projects
specified in the Trust Fund legislation, the
Department has created a total of 1,133 new positions. Table 23 contains a breakdown of
the total number of positions funded through the Trust Fund by year. According to
Department management, these positions are used to support both Trust Fund and
Highway Fund projects. While “ work order” or field staff charge their time to specific
work orders showing fund type, no breakdown of time spent on each fund has been
performed for administrative positions. In our opinion, the positions supported by the
Trust Fund should be directly related to the workload generated by Trust Fund projects.
Therefore, as Trust Fund projects are completed, it should be possible to reassign and/ or
eliminate some of the positions now supported by the Trust Fund. At the time of the
audit, the Department did not have a formal plan for staff reduction. Without a formal
plan in place, efficient Trust Fund position management is impaired as projects are
completed. Approximately 27% of the road miles associated with Trust Fund projects
have been completed at December 31, 1997.
FINDINGS AND RECOMMENDATIONS
44
RECOMMENDATION
An analysis should be performed on all positions paid for by the Trust
Fund to determine the percentage of time associated with
responsibilities directly related to projects supported by this fund.
The time spent on Trust Fund operations should be billed to the
appropriate Trust Fund account. Department management should
also review job descriptions for accuracy after the position analysis is
complete. The Department should develop a Trust Fund position
reduction schedule to better plan adjustment of positions as projects
are completed. The Department should employ resources from its
Human Resources and Project Engineering Divisions in coordinating
the position reduction plan.
THE DEPARTMENT DOES NOT HAVE WRITTEN POLICIES AND
PROCEDURES FOR TRUST FUND EXPENDITURES.
GS § 136- 176( b) states that the Highway Trust Fund is to be used to administer, plan,
design, and construct projects of the interstate system and urban loops, supplement
appropriations for city streets, and provide for secondary road construction. The only
legislative guidelines for expenditures of the Highway Trust Fund are a limit of 4.5% of
the total revenue for use on administrative functions.
During the audit, we learned that Trust Fund administrative procedures, such as the
expenditure approval process, have not been formalized as written procedures. A written
manual was not deemed a priority due to the high experience level of personnel involved
in the administration of the Trust Fund. However, as the Department continues to
reorganize and retirements arise, employees placed in these positions who are unfamiliar
with the procedures are without a tool necessary for efficient and consistent operations.
Written procedures are critical to guide employees in the performance of their job duties.
The broad guidelines contained in the legislation, along with the absence of departmental
written administrative policies and procedures for the Highway Trust Fund, have provided
management with tremendous freedom in making decisions on expenditures to be
supported by this Fund.
RECOMMENDATION
The Department should modify its existing policies and procedures
manuals to include Trust Fund administration. The manual should
include step- by- step procedures required to perform the
administrative duties supported by this fund. A standard procedure
for updating and distribution should also be developed. Management
should require strict adherence to these policies and procedures.
These guidelines would provide management with an important tool
to assist in decision making.
APPENDICES
45
Appendix Description Page
A General Statutes: Article 14, Chapter 136 47
B Response from the Secretary of the Department of Transportation 55
APPENDICES
46
[ This page left blank intentionally.]
APPENDICES
Appendix A
47
ARTICLE 14. NORTH CAROLINA HIGHWAY TRUST FUND
Current through end of 1997 legislation
REPEAL OF ARTICLE
Laws 1989, c. 692, § 8.4, provides, in part:
" When contracts for all projects specified in Article 14 of Chapter 136 of the General Statutes have been
let and sufficient revenue has been accumulated to pay the contracts, the Secretary of Transportation shall
certify this occurrence by letter to the Speaker of the House of Representatives, the President Pro Tempore
of the Senate, and the Secretary of State. The changes below shall become effective on the first day of the
calendar quarter following the date the Secretary sends the letter, unless there is less than 30 days between
the date the letter is sent and the first day of the following quarter. In that circumstance, the changes shall
become effective on the first day of the second calendar quarter following the date the Secretary sends the
letter.
"( 1) Article 14 of Chapter 136 of the General Statutes is repealed."
§ 136- 175. Definitions
Current through end of 1997 legislation
The following definitions apply in this Article:
( 1) Intrastate System. The network of major, multilane arterial highways composed of those projects
listed in G. S. 136- 179, I- 240, I- 277, US- 29 from I- 85 to the Virginia line, and any other route added by
the Department of Transportation under G. S. 136- 178.
( 2) Transportation Improvement Program. The schedule of major transportation improvement projects
required by G. S. 143B- 350( f)( 4).
( 3) Trust Fund. The North Carolina Highway Trust Fund.
§ 136- 176. Creation, revenue sources, and purpose of North Carolina Highway Trust Fund
Current through end of 1997 legislation
( a) A special account, designated the North Carolina Highway Trust Fund, is created within the State
treasury. The Trust Fund consists of the following revenue:
( 1) Motor fuel, alternative fuel, and road tax revenue deposited in the Fund under G. S. 105- 449.125, 105-
449.134, and 105- 449.43, respectively.
( 2) Motor vehicle use tax deposited in the Fund under G. S. 105- 187.9.
( 3) Revenue from the certificate of title fee and other fees payable under G. S. 20- 85.
( 4) Revenue available from the retirement of refunding bonds issued to repay highway construction bonds
and deposited in the Fund under G. S. 136.183.
( 5) Interest and income earned by the Fund.
( b) Funds in the Trust Fund are annually appropriated to the Department of Transportation to be allocated
and used as provided in this subsection. A sum, not to exceed four and one- half percent ( 4.5%) of the
amount of revenue deposited in the Trust Fund under subdivisions ( a)( 1), ( 2), and ( 3) of this section, may
be used each fiscal year by the Department for expenses to administer the Trust Fund. The rest of the
funds in the Trust Fund shall be allocated and used as follows:
APPENDICES
Appendix A
48
( 1) Sixty- one and ninety- five hundredths percent ( 61.95%) to plan, design, and construct the projects of
the Intrastate System described in G. S. 136- 179 and to pay debt service on highway bonds and notes that
are issued under the State Highway Bond Act of 1996 and whose proceeds are applied to these projects.
( 2) Twenty- five and five hundredths percent ( 25.05%) to plan, design, and construct the urban loops
described in G. S. 136- 80 and to pay debt service on highway bonds and notes that are issued under the
State Highway Bond Act of 1996 and whose proceeds are applied to these urban loops.
( 3) Six and one- half percent ( 6.5%) to supplement the appropriation to cities for city streets under G. S.
136- 181.
( 4) Six and one- half percent ( 6.5%) for secondary road construction as provided in G. S. 136- 182 and to
pay debt service on highway bonds and notes that are issued under the State Highway Bond Act of 1996
and whose proceeds are applied to secondary road construction.
The Department must administer funds allocated under subdivisions ( 1), ( 2), and ( 4) of this subsection in
a manner that ensures that sufficient funds are available to make the debt service payments on bonds
issued under the State Highway Bond Act of 1996 as they become due.
( c) If funds are received under 23 U. S. C. Chapter 1, Federal- Aid Highways, for a project for which funds
in the Trust Fund may be used, the amount of federal funds received plus the amount of any funds from
the Highway Fund that were used to match the federal funds may be transferred by the Secretary of
Transportation from the Trust Fund to the Highway Fund and used for projects in the Transportation
Improvement Program.
( d) A contract may be let for projects funded from the Trust Fund in anticipation of revenues pursuant to
the cash- flow provisions of G. S. 143- 28.1 only for the two bienniums following the year in which the
contract is let.
Amended by Laws 1995, c. 390, § 27, eff. Jan. 1, 1996; Laws 1995, c. 590, § 6, eff. Nov. 26, 1996; Laws
1996, 2 Ex. Sess., c. 18, § 19.4( a), eff. July 1, 1996.
HISTORICAL NOTES
HISTORICAL AND STATUTORY NOTES
Laws 1995, c. 590, § § 9, 17, provide:
" Sec. 9. Election. The question of the issuance of the bonds authorized by this act shall be submitted to
the qualified voters of the State at the general election in November 1996. Any other primary, election, or
referendum validly called or scheduled by law at the time the election on the bond question provided for in
this section is held may be held as called or scheduled. Notice of the election shall be given in the manner
and at the times required by G. S. 163- 33( 8). The election and the registration of voters for the election
shall be held under and in accordance with the general laws of the State. Absentee ballots shall be
authorized in the election.
" The State Board of Elections shall reimburse the counties of the State for all necessary expenses incurred
in holding the election which are in addition to those which would have otherwise been incurred, these
expenses to be paid out of the Contingency and Emergency Fund or other funds available to the State
Board of Elections.
" Ballots, voting systems authorized by Article 14 of Chapter 163 of the General Statutes, or both may be
used in accordance with rules prescribed by the State Board of Elections. The bond question to be used in
the ballots or voting systems shall be in substantially the following form:
"[ ] FOR [ ] AGAINST
APPENDICES
Appendix A
49
" The issuance of nine hundred fifty million dollars ($ 950,000,000) State of North Carolina Highway
Bonds constituting general obligation bonds of the State secured by a pledge of the faith and credit and
taxing power of the State for the purpose of providing funds, with any other available funds, through the
application of not in excess of five hundred million dollars ($ 500,000,000) of the bonds to pay the capital
costs of urban loops, the application of not in excess of three hundred million dollars ($ 300,000,000) of
the bonds to pay the capital costs of Intrastate System projects, and the application of not in excess of one
hundred fifty million dollars ($ 150,000,000) of the bonds to pay the capital costs of projects constituting a
part of the State secondary highway system resulting in the paving of unpaved roads.
" If a majority of those voting on the bond question vote in favor of the issuance of the bonds, the bonds
may be issued as provided in this act. If a majority of those voting on the bond question vote against the
issuance of the bonds, the bonds shall not be issued.
" The results of the election shall be canvassed and declared as provided by law for the holding of elections
for State officers; the results of the election shall be certified by the State Board of Elections to the
Secretary of State, in the manner and at the time provided by the general election laws of the State."
" Sec. 17. Effective date. This act is effective upon ratification, except that Sections 6, 7, 15, and 16 shall
become effective upon the certification of a favorable vote on the bonds by the State Board of Elections to
the Secretary of State as provided in Section 9 of this act."
Laws 1995, c. 590, was ratified June 20, 1996.
The bond question proposed by Laws 1995, c. 590, § 9, was approved at the 1996 general election, and
was certified Nov. 26, 1996.
§ 136- 177. Limitation on funds obligated from Trust Fund
Current through end of 1997 legislation
In a fiscal year, the Department of Transportation may not obligate more Trust Fund revenue, other than
revenue allocated for city streets under G. S. 136- 176( b)( 3) or secondary roads under G. S. 136- 176( b)( 4)
and G. S. 20- 85( b), to construct or improve highways than the amount indicated in the following table:
Fiscal Year Maximum Expenditure
1989- 90 $ 200,000,000
1990- 91 250,000,000
1991- 92 300,000,000
1992- 93 400,000,000
1993- 94 500,000,000
1994- 95 and following years Unlimited
The amount of revenue credited to the Trust Fund in a fiscal year under G. S. 136- 176( a) that exceeds the
maximum allowable expenditure set in the table above may be used only for preliminary planning and
design and the acquisition of rights- of- way for scheduled highways and highway improvements to be
funded from the Trust Fund.
§ 136- 177.1. Requirement to use federal funds for Intrastate System projects and urban loops
Current through end of 1997 legislation
For fiscal years 1996- 97 through 2010- 11, the Department of Transportation must use ten million dollars
APPENDICES
Appendix A
50
($ 10,000,000) of the funds it receives each year under 23 U. S. C. Chapter 1, Federal- Aid Highways, to
construct the Intrastate System projects described in G. S. 136- 179. For fiscal years 1996- 97 through
2011- 12, the Department of Transportation must use ten million dollars ($ 10,000,000) of the funds it
receives each year under 23 U. S. C. Chapter 1, Federal- Aid Highways, to construct the urban loops
described in G. S. 136- 180. G. S. 136- 176( c) does not apply to federal funds required to be used under this
section for Intrastate System projects or urban loops, nor does it apply to any funds from the Highway
Fund that were used to match these federal funds.
Added by Laws 1995, c. 590, § 15, eff. Nov. 26, 1996.
§ 136- 178. Purpose of Intrastate System
Current through end of 1997 legislation
The Intrastate System is established to provide high- speed, safe travel service throughout the State. It
connects major population centers both inside and outside the State and provides safe, convenient,
through- travel for motorists. It is designed to support statewide growth and development objectives and to
connect to major highways of adjoining states. All segments of the routes in the Intrastate System shall
have at least four travel lanes and, when warranted, shall have vertical separation or interchanges at
crossings, more than four travel lanes, or bypasses. Access to a route in the Intrastate System is
determined by travel service and economic considerations.
The Department of Transportation may add a route to the Intrastate System if the route is a multilane
route and has been designed and built to meet the construction criteria of the Intrastate System projects.
No funds may be expended from the Trust Fund on routes added by the Department.
§ 136- 179. Projects of Intrastate System funded from Trust Fund
Current through end of 1997 legislation
Funds allocated from the Trust Fund for the Intrastate System may be used only for the following projects
of the Intrastate System:
Route Improvements Affected Counties
I- 40 Widening Buncombe, Haywood, Guilford,
Wake, Durham
I- 77 Widening Mecklenburg
I- 85 Widening Durham, Orange, Alamance,
Guilford, Cabarrus,
Mecklenburg, Gaston
I- 95 Widening Halifax
US- 1 Complete 4- laning from Henderson to South
Carolina Line ( including 6- laning of Raleigh
Beltline)
Vance, Franklin, Wake,
Chatham, Lee, Moore, Richmond
US- 13 Connector from I- 95 to NC- 87 Cumberland
US- 13 Complete 4- laning from Virginia Line to US-
17
Gates, Hertford, Bertie
US- 17 Complete 4- laning from Virginia Line to
South Carolina Line ( including Washington,
New Bern, and Jacksonville Bypasses)
Camden, Pasquotank,
Perquimans, Chowan, Bertie,
Martin, Beaufort, Craven, Jones,
Onslow, Pender, New Hanover,
Brunswick
US- 19/ US- 19E Complete 4- laning from US- 23 to NC 194 in Madison, Yancey, Mitchell,
APPENDICES
Appendix A
51
Ingalls Avery
US- 19 Complete 4- laning Cherokee, Macon, Swain
US- 23 Complete 4- laning and upgrading existing 4-
lanes from Tennessee Line to I- 240
Madison, Buncombe
US- 23- 441 Complete 4- laning from US- 19/ US- 74 to
Georgia Line
Macon
US- 52 Complete 4- laning from I- 77 to Lexington
( including new I- 77 Connector)
Surry, Davidson
US- 64 Complete 4- laning from Raleigh to Coast
( including freeway construction from I- 95 to
US- 17)
Edgecombe, Pitt, Martin,
Washington, Tyrrell, Dare
US- 64 Complete 4- laning from Lexington to Raleigh Davidson, Randolph, Chatham,
Wake
US- 70 Complete 4- laning from Raleigh to Morehead
City ( including Clayton, Goldsboro, Kinston,
Smithfield- Selma, and Havelock Bypasses
predominately freeways on predominately new
locations)
Wake, Johnston, Wayne, Lenoir,
Craven
US- 74 Complete 4- laning from Charlotte to US- 17
( including multilaning of Independence Blvd.
in Charlotte, and Bypasses of Monroe,
Rockingham, and Hamlet)
Mecklenburg, Union, Richmond,
Robeson, Columbus
US- 74 Complete 4- laning from I- 26 to I- 85 Polk, Rutherford
US- 158 Complete 4- laning from Winston- Salem to
Whalebone
Forsyth, Guilford, Rockingham,
Caswell, Person, Granville,
Vance, Warren, Halifax,
Northampton, Gates, Hertford,
Pasquotank, Camden, Currituck,
Dare
New bridge over Currituck Sound Currituck
US- 221 Complete 4- laning from Linville to South
Carolina
Avery, McDowell, Rutherford
US- 220 Complete 4- laning from I- 40 to US- 1 Guilford, Randolph,
Montgomery, Richmond
US- 220/ NC- 68 Complete 4- laning from Virginia Line to I- 40 Rockingham, Guilford
US- 264 Complete 4- laning from US- 64 to Washington
( including Wilson and Greenville Bypasses)
( including freeway construction from I- 95 to
Greenville)
Wilson, Greene, Pitt
US- 321 Complete 4- laning from Boone to South
Carolina Line
Caldwell, Catawba, Lincoln,
Gaston
US- 421 Complete 4- laning from Tennessee Line to I-
40
Watauga, Wilkes, Yadkin
US- 421 Complete 4- laning from Greensboro to
Sanford ( including Bypass of Sanford)
Chatham, Lee
NC- 24 Complete 4- laning from Charlotte to
Morehead City
Mecklenburg, Cabarrus, Stanly,
Montgomery, Moore, Harnett,
Cumberland, Sampson, Duplin,
Onslow, Carteret
APPENDICES
Appendix A
52
NC- 87 Complete 4- laning